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EXHIBIT 3.21
CERTIFICATE OF INCORPORATION
OF
HEALTH DATA SCIENCES CORPORATION
1. The name of the corporation is:
HEALTH DATA SCIENCES CORPORATION
2. The address of its registered office in the State of Delaware is 100
West Tenth Street in the City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation Trust Company.
3. 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 General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Million (1,000,000) and the par value of each of such
shares is One Dollar ($1.00) amounting in the aggregate to One Million Dollars
($1,000,000).
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by ballot.
6. The name and mailing address of the incorporator is:
L. M. Custis
199 West Tenth Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this
is my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 25th day of April, 1983.
/s/ L. M. Custis
--------------------------
L. M. Custis
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HEALTH DATA SCIENCES CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
It is hereby certified that:
1. The name of this corporation is HEALTH DATA SCIENCES CORPORATION.
2. The undersigned constitute a majority of the Board of Directors of the
corporation.
3. The Certificate of Incorporation of the corporation is hereby amended
by striking out ARTICLE 4 thereof and by substituting in lieu of said Article
the following new Article:
"4. This corporation is authorized to issue two classes of shares
designed respectively "Common Stock" and "Preferred Stock." The total
number of shares of Common Stock which the corporation shall have authority
to issue is Ten Million (10,000,000) and the par value of each such share
is Ten Cents ($0.10), amounting in the aggregate to One Million Dollars
($1,000,000.00). The total number of shares of Preferred Stock which the
corporation shall have the authority to issue is Five Million (5,000,000)
and the par value of each such share is Ten Cents ($0.10), amounting in the
aggregate to Five Hundred Thousand Dollars ($500,000.00).
The shares of Preferred Stock may be issued from time to time in one
or more series. The Board of Directors is authorized to: fix the number of
shares of any series of Preferred Stock; determine the designation of any
such series; determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of
Preferred Stock; and, within the limits and restrictions stated in any
resolution or resolutions of the Board of Directors originally fixing the
number of shares constituting any series, increase or decrease (but not
below the number of shares of such series then outstanding) the number of
shares of any such series subsequent to the issue of shares of that
series."
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4. The amendment of the Certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 241 of the
General Corporation Law of the State of Delaware.
5. The corporation has not yet received any payment for any of its stock.
IN WITNESS WHEREOF, the undersigned directors of the corporation have
executed this Certificate of Amendment as of the 1st day of May, 1983.
/s/ Ralph A. Korpman
--------------------------------
RALPH A. KORPMAN
/s/ Peter T. Tong
--------------------------------
PETER T. TONG
/s/ Jere E. Chrispens
--------------------------------
JERE E. CHRISPENS
/s/ Charles S. Grobe
--------------------------------
CHARLES S. GROBE
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CERTIFICATE OF DESIGNATIONS
OF PREFERENCES AND RIGHTS OF SERIAL
PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation (as amended) of said corporation, and pursuant to
the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, by unanimous written consent on August 25, 1983, adopted a
resolution providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations
or restrictions thereof, of the Preferred Shares-Series A stock, which
resolution is as follows:
WHEREAS, the Certificate of Incorporation of this corporation provide for
a class of shares known as Preferred Stock, issuable from time to time in one
or more series; and
WHEREAS, the Board of Directors of this corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
determine or alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of the Preferred Stock,
to fix the number of shares constituting any such series, and to determine the
designation thereof; and
WHEREAS, this corporation has not issued any shares of such Preferred
Stock and the Board of Directors of this corporation desires, pursuant to its
authority as aforesaid, to fix the terms of the initial series of said
Preferred Stock and the number of shares constituting and the designation of
such series;
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RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said initial series of Preferred Stock
as follows:
(A) The initial series of Preferred Stock shall be designated "Serial
Preferred Shares, Series A", and the number of shares constituting such Series
A shall be Nine Thousand Four Hundred Eleven (9,411).
(B) The rights, preferences, privileges and restrictions of, and other
matters relating to, the Series A Preferred Stock are as follows:
1. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of each share of Series A Preferred Stock (and the
holders of each share of any other series of Preferred Stock having the same
rights on voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the corporation) shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock of the corporation by reason of
their ownership thereof, an amount equal to One Hundred Dollars ($100) per
share.
All the preferential amounts to be paid to the holders of the Series A
Preferred Stock (and to the holders of any other such series of Preferred
Stock) under this section 1 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of the Common Stock in connection
with such liquidation, dissolution or winding up. After the payment or the
setting apart of payment to the holders of the Series A Preferred Stock of the
preferential amounts so payable to them, the holders of Common Stock shall be
entitled to receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders of the
Series A Preferred Stock are insufficient to permit the payment to such holders
of their full preferential amount, the assets and surplus funds legally
available for distribution shall be distributed ratably among the holders of
the Series A Preferred Stock (and the holders of any other such series of
Preferred Stock) in proportion to the full preferential amount each such holder
is otherwise entitled to receive.
2. Conversion. The holders of the Series A Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
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(a) Right to Convert. Each share of Series A Preferred Stock
shall be convertible, without the payment of any additional consideration by
the holder thereof and at the option of the holder thereof, at any time after
the date of issuance of such share, at the office of the corporation or any
transfer agent for the Series A Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing One
Hundred Dollars ($100) by the Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion without the payment
of any additional consideration by the holder thereof (the "Conversion Price")
shall initially be Seventy Cents ($.70) per share of Common Stock. Such initial
Conversion Price shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which the Series A Preferred Stock is
convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Series A Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Conversion Price upon the earlier to occur of (i) the date on which
the corporation is subject to the reporting requirements of Section 13(a) of
the Securities Exchange Act of 1934, as amended, or (ii) the date on which
quotations for the Common Stock are reported by the automated quotations system
operated by the National Association of Securities Dealers, Inc., or, by an
equivalent quotations system, or (iii) shares of Common Stock have been sold at
the aggregate price of $5,000,000 or more pursuant to a public offering.
(c) Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu
of any fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series A Preferred Stock shall
be entitled to convert the same into full shares of Common Stock, and before
the corporation shall be obligated to issue certificates for shares of Common
Stock upon the automatic conversion of the Series A Preferred Stock as set
forth in section 2(b) hereof, the Series A Preferred Stock holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the corporation or of any transfer agent for the Series A Preferred
Stock and shall give written notice to the corporation at such office that he
elects to convert the same and shall state therein his name or the name or
names of his nominees in which he wishes the certificate or certificates for
shares of Common Stock to be issued (except that no such written notice of
intent to convert shall be necessary in the event of an automatic conversion
pursuant to section
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2(b) hereof). The corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Series A Preferred Stock, or to
his nominee or nominees, a certificate or certificates for the number of Shares
of Common Stock to which he shall be entitled as aforesaid, together with cash
in lieu of any fraction of a share. 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 (except
that in the case of an automatic conversion pursuant to section 2(b) hereof,
such conversion shall be deemed to have been made immediately prior to the
closing of the offering referred to in section 2(b)), and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
(1) Stock Dividends, Distributions or Subdivisions.
In the event the corporation shall issue additional shares of Common Stock
pursuant to a stock dividend, stock distribution or subdivision, the Conversion
Price in effect immediately prior to such stock dividend, stock distribution or
subdivision shall, concurrently with the effectiveness of such stock dividend,
stock distribution or subdivision, be proportionately decreased.
(2) Combinations or Consolidations. In the event
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(ii) Adjustment for Merger or Reorganization, etc. In
case of any consolidation or merger of the corporation with or into another
corporation or the conveyance of all or substantially all the assets of the
corporation to another corporation, each share of Series A Preferred Stock
shall thereafter be convertible into the number of shares of stock or other
securities or property to which a holder of the number of shares of Common
Stock of the corporation deliverable upon conversion of such Series A Preferred
Stock would have been entitled upon such consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined by the Board of
Directors) shall be made in
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the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Series A Preferred Stock, to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the conversion of the Series A
Preferred Stock.
(e) No Impairment. The corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
section 2 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.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this section 2,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series A Preferred Stock.
(g) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the corporation shall mail to each
holder of Series A Preferred Stock at least ten (10) 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 or distribution.
(h) Common Stock Reserved. The corporation shall reserve and
keep available out of its authorized but
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unissued Common Stock such number of shares of Common Stock as shall from time
to time be sufficient to effect conversion of the Series A Preferred Stock.
3. Redemption.
(a) Voluntary Redemption of Series A Preferred Stock.
(i) Time of Redemption. At, or at any time after, the
date that is four (4) years subsequent to the date on which the first share of
Series A Preferred Stock was originally issued ("Original Issue Date"), the
corporation may, at the option of the Board of Directors, redeem the Series A
Preferred Stock in whole or in part pro-rata.
(ii) The redemption price for each share of Series A
Preferred Stock shall be an amount in cash equal to the sum of One Hundred
Dollars ($100.00) plus the amount of all accrued and unpaid dividends thereon,
declared by the Board of Directors, to and including the date fixed for
redemption (such total amount being referred to as the "Voluntary Redemption
Price").
(iii) At least sixty (60) days and not more than ninety
(90) days prior to the date fixed for any such redemption (the "Voluntary
Redemption Date") of the Series A Preferred Stock, written notice (the
"Voluntary Redemption Notice") shall be mailed, postage prepaid, to each holder
of record of the Series A Preferred Stock at such holder's post office address
last shown on the records of the corporation and shall contain the following
information:
(A) The Voluntary Redemption Price and the Voluntary
Redemption Date;
(B) The date upon which the holder's Conversion
Rights, as defined in Section (B)2 hereof, as to such shares terminate, which
shall not, however, be earlier than forty-five (45) days after the date of the
Voluntary Redemption Notice; and
(C) That the holder is to surrender to the
corporation, in the manner and at the place designated, his certificate or
certificates representing the shares of Series A Preferred Stock to be redeemed.
(D) Surrender of Certificates. On or before the
Voluntary Redemption Date, each holder of Series A Preferred Stock to be
redeemed, unless such holder has thereafter exercised his right to convert the
shares as provided in paragraph (B)2 hereof, shall surrender the
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certificate on certificates representing such shares to the Corporation, in the
manner and at the place designated in the Voluntary Redemption Notice, and
thereupon the Voluntary Redemption Price for such shares shall be payable to
the order of the person whose name appears on such certificate or certificates
as the owner thereof, and each surrendered certificate shall be cancelled and
retired.
(E) Cessation of Rights. If the Voluntary
Redemption Notice shall have been duly given, and if on the Voluntary
Redemption Date the Voluntary Redemption Price is either paid or made available
for payment; then notwithstanding that the certificates evidencing any of the
shares of Series A Preferred Stock so called for redemption shall not have been
surrendered, all rights with respect to such shares shall forthwith after the
Voluntary Redemption Date terminate, except only the right of the holders to
receive the voluntary Redemption Price without interest upon surrender of their
certificate or certificates therefor.
(F) Payment of Redemption Price. On or not more than
ten (10) days prior to the Voluntary Redemption Date, the Corporation shall
deposit with any bank or trust company in Los Angeles, California, having a
capital and surplus of at least $100,000,000 as a trust fund, a sum equal to
the aggregate Voluntary Redemption Price of all shares of Series A Preferred
Stock called for redemption and not yet redeemed, with irrevocable instructions
and authority to the bank or trust company to pay, on or before the Voluntary
Redemption Date, the Voluntary Redemption Price to the active holders upon the
surrender of their share certificates. From and after the date of such deposit,
the shares so called for redemption shall be redeemed. The deposit shall
constitute full payment of the shares to their holders, and from and after the
date of the deposit the shares shall be deemed to be no longer outstanding, and
the holders thereof shall cease to be shareholders with respect to such shares
and shall have no rights with respect thereto except the rights to receive from
the bank or trust company payment of the Voluntary Redemption Price of the
shares, without interest, upon surrender of their certificates therefor, and
the right to convert such shares as provided in paragraph (B)2 hereof. Any
funds so deposited and unclaimed at the end of one year from the Voluntary
Redemption Date shall be released or repaid to the Company, after which the
holders of shares called for redemption shall be entitled to receive payment of
the Voluntary Redemption Price only from the corporation.
(b) Consent to Redemption by Series A Preferred Stockholders.
Each holder of Series A Preferred Stock shall be deemed to have consented, for
purposes of Sections 502, 503 and 506 of the California General Corporations
Law, to distributions made by the corporation in
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connection with the repurchase of shares of Common Stock issued to or held by
employees or consultants upon termination of their employment or services
pursuant to agreements providing for the right of said repurchase between the
corporation and such persons.
4. Voting Rights. Except as otherwise required by law, the
holders of Series A Preferred Stock and the holders of the Common Stock shall be
entitled to notice of any shareholders' meeting and to vote upon any matter
submitted to a shareholder for a vote, on the following basis:
(a) Holders of Common Stock shall have one vote per share;
(b) Holders of Series A Preferred Stock shall have that number
of votes per share as is equal to the number of shares of Common Stock into
which each such share of Series A Preferred Stock held by such holder is
convertible except that the holders of the Series A Preferred Stock shall when
electing members of the Company's Board of Directors have the right as a class
to elect two (2) of such Directors;
(c) Except as otherwise provided in the preceding subsection
(b), neither the holders of the Common Stock nor the holders of the Series A
Preferred Stock shall be entitled to vote separately on any matters as a class.
5. Dividend Rights. The holders of outstanding Series A
Preferred Stock shall be entitled to receive in any fiscal year, when and if
declared by the Board of Directors, out of any assets at the time legally
available therefor, dividends in cash at the rate of $7.00 per share of Series
A Preferred Stock per annum, before any dividend is paid on Common Shares;
provided, however, that in no event shall the Board of Directors declare and
set apart or pay a dividend on the outstanding Series A Preferred Stock in
excess of an amount equal to twenty-five percent (25%) of the corporation's
pre-tax income for such quarter, calculated in accordance with generally
accepted accounting principles, consistently applied. Such dividends may be
payable quarterly or otherwise as the Board of Directors may from time to time
determine. The right to such dividends on Series A Preferred Stock shall not be
cumulative and no right shall accrue to holders of Series A Preferred Stock by
reason of the fact that dividends on said shares are not declared in any prior
year, nor shall any undeclared or unpaid dividend bear or accrue interest.
6. Covenants. So long as any shares of Series A Preferred Stock
shall be outstanding (as adjusted for all subdivisions and combinations), the
corporation shall not,
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without first obtaining the affirmative vote or written consent of not less than
a majority of such outstanding shares of Series A Preferred Stock:
(a) amend or repeal any provision of, or add any provision to,
the corporation's Certificate of Incorporation or By-laws if such action would
alter or change the preferences, rights or privileges of, or the restrictions
provided for the benefit of, the Series A Preferred Stock;
(b) reclassify any Common Stock into shares having any
preference or priority as to dividends or assets superior to any such preference
or priority of the Series A Preferred Stock; or
(c) pay or declare any dividend other than a stock dividend or
distribution on any shares of Common Stock or apply any of its assets to the
redemption, retirement, purchase or other acquisition directly or indirectly,
through subsidiaries or otherwise, of any shares of Common Stock except from
employees of the corporation upon termination of employment or pursuant to the
exercise of a contractual right of first refusal.
7. Residual Rights. All rights accruing in the outstanding shares
of the corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Ralph A. Korpman, its President, and attested by
Charles S. Grobe, its Secretary, this 25 day of August 1983.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Ralph A. Korpman
---------------------------
RALPH A. KORPMAN
President
ATTEST:
By: /s/ Charles S. Grobe
--------------------------
CHARLES S. GROBE
Secretary
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STATE OF CALIFORNIA )
) SS.
COUNTY OF LOS ANGELES )
RALPH A. KORPMAN and CHARLES S. GROBE, each being first duly sworn, deposes
and says that:
They are the President and Secretary respectively of the Delaware
corporation herein mentioned; the matters set forth herein are true of their
own knowledge; and the signatures purporting to be the signatures of said Ralph
A. Korpman and Charles S. Grobe thereto are their genuine signatures.
/s/ Ralph A. Korpman
--------------------------------------
RALPH A. KORPMAN
Subscribed and Sworn to before me on August 25, 1983.
/s/ Suzanne R. Talx
--------------------------------------
NOTARY PUBLIC
State of California
/s/ Charles S. Grobe
--------------------------------------
CHARLES S. GROBE
/s/ Karie A. Emery
- ----------------------------------- [SEAL]
KARIE A. EMERY
[SEAL]
[SEAL]
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CERTIFICATE OF DESIGNATIONS
OF PREFERENCES AND RIGHTS OF SERIAL
PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation (as amended) of said corporation, and pursuant to
the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, by unanimous written consent as of April 5, 1984, adopted a
resolution providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of the Preferred Shares-Series B stock, which resolution
is as follows:
WHEREAS, the Certificate of Incorporation of this corporation provides for
a class of shares known as Preferred Stock, issuable from time to time in one
or more series; and
WHEREAS, the Board of Directors of this corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
determine or alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of the Preferred Stock,
to fix the number of shares constituting any such series, and to determine the
designation thereof; and
WHEREAS, this corporation has issued only shares of Series A Preferred
Stock and the Board of Directors of this corporation desires, pursuant to its
authority as aforesaid, to fix the terms of a second series of said Preferred
Stock and the number of shares constituting and the designation of such series;
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RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said second series of Preferred Stock
as follows:
(A) The second series of Preferred Stock shall be designated "Serial
Preferred Shares, Series B", and the number of shares constituting such Series
B shall be Seven Hundred Forty-Two Thousand (742,000).
(B) The rights, preferences, privileges and restrictions of, and other
matters relating to, the Series B Preferred Stock are as follows:
1. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of each share of Series B Preferred Stock (and the
holders of each share of any other series of Preferred Stock having the same
rights on voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the corporation) shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock of the corporation by reason of
their ownership thereof, an amount equal to Five Dollars and Sixty-Three Cents
($5.63) per share.
All the preferential amounts to be paid to the holders of the Series B
Preferred Stock (and to the holders of any other such series of Preferred
Stock) under this section 1 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of the Common Stock in connection
with such liquidation, dissolution or winding up. After the payment or the
setting apart of payment to the holders of the Series B Preferred Stock and to
the holders of any other such series of Preferred Stock of the preferential
amounts so payable to them, the holders of Common Stock shall be entitled to
receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders of the
Series B Preferred Stock are insufficient to permit the payment to such holders
and to the holders of any other such series of Preferred Stock of their full
preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Series B
Preferred Stock (and the holders of any other such series of Preferred Stock)
in proportion to the full preferential amount each such holder is otherwise
entitled to receive.
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2. Conversion. The holders of the Series B Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred Stock
shall be convertible, without the payment of any additional consideration by
the holder thereof and at the option of the holder thereof, at any time after
the date of issuance of such share, at the office of the corporation or any
transfer agent for the Series B Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing Five
Dollars and Sixty-Three Cents ($5.63) by the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion Price
at which shares of Common Stock shall be deliverable upon conversion without
the payment of any additional consideration by the holder thereof (the
"Conversion Price") shall initially be Five Dollars and Sixty-Three Cents
($5.63) per share of Common Stock. Such initial Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Series B Preferred Stock is convertible, as hereinafter
provided.
(b) Automatic Conversion. Each share of Series B Preferred
Stock shall automatically be converted into shares of Common Stock at the then
effective Conversion Price upon the earlier to occur of (i) the date on which
the corporation is subject to the reporting requirements of Section 13(a) of
the Securities Exchange Act of 1934, as amended, or (ii) the date on which
quotations for the Common Stock are reported by the automated quotations system
operated by the National Association of Securities Dealers, Inc., or by an
equivalent quotations system, or (iii) shares of Common Stock have been sold at
an aggregate price of $7,000,000 or more pursuant to a public offering.
(c) Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of the Series B Preferred Stock. In lieu
of any fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series B Preferred Stock shall
be entitled to convert the same into full shares of Common Stock, and before
the corporation shall be obligated to issue certificates for shares of common
stock upon the automatic conversion of the Series B Preferred Stock as set
forth in section 2(b) hereof, the Series B Preferred Stock holder shall
surrender the certificate or certificates therefor, duly endorsed, at the
office of the corporation or of any transfer agent for the Series B Preferred
Stock and shall give written notice to the corpo-
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ration at such office that he elects to convert the same and shall state
therein his name or the name or names of his nominees in which he wishes the
certificate or certificates for shares of Common Stock to be issued (except
that no such written notice of intent to convert shall be necessary in the
event of an automatic conversion pursuant to section 2(b) hereof). The
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series B Preferred Stock, or to his nominee or
nominees, a certificate or certificates for the number of Shares of Common
Stock to which he shall be entitled as aforesaid, together with cash in lieu of
any fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series B Preferred Stock to be converted (except that in the case of
an automatic conversion pursuant to section 2(b) hereof, such conversion shall
be deemed to have been made immediately prior to the closing of the offering
referred to in section 2(b)), and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this
paragraph 2(d), the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Original Issue Date" shall mean the date on
which a share of Series B Preferred Stock was first issued.
(3) "Convertible Securities" shall mean any evidences
of indebtedness, shares (other than Common Stock and Series B Preferred Stock)
or other securities directly or indirectly convertible into or exchangeable for
Common Stock.
(4) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to subparagraph 2(d)(ii),
deemed to be issued) by the corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable:
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18
(A) upon conversion of shares of Series B
Preferred Stock and Series A Preferred Stock;
(B) to officers or employees of, or consultants
to, the corporation pursuant to a stock purchase or option plan or other
employee stock incentive program (collectively, the "Plans") approved by the
Board of Directors not to exceed four hundred thousand (400,000) shares, none of
which are outstanding on the date hereof; or
(C) by way of dividend or other distribution on
shares of Common Stock excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A) and (B) or this clause (C).
(ii) Issue of Securities Deemed Issue of Additional Shares
of Common Stock.
(l) Options and Convertible Securities. In the
event the corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date; provided, that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to subparagraph 2(d)(iv)
hereof) of such Additional Shares of Common Stock would be less than the lesser
of Five Dollars and Twenty Cents ($5.20) or the Conversion Price in effect on
the date of and immediately prior to such issue, or such record date, as the
case may be; and provided further, that in any such case in which Additional
Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of
-5-
19
time or otherwise, for any increase in the consideration payable to the
corporation, or decrease in the number of shares of Common Stock issuable, upon
the exercise, conversion or exchange thereof, the Conversion Price computed
upon the original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(I) in the case of Convertible Securities
or Options for Common Stock the only Additional Shares of Common Stock issued
were the shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities and
the consideration received therefor was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the corporation upon such exercise,
or for the issue of all such Convertible Securities which were actually
converted, if any, actually received by the corporation upon such conversion or
exchange and
(II) in the case of Options for Convertible
Securities only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received
by the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to subparagraph 2(d)(iv)) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B) or
(C) above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) Five Dollars and Sixty-Three Cents ($5.63), (ii)
the Conversion Price on the original adjustment date, or (iii) the Conversion
Price that would have resulted from
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20
any other issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
(E) in the case of any Options which expire by
their terms not more than thirty (30) days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration of
exercise of all such Options, whereupon such adjustment shall be made in the
same manner provided in clause (C) above; and
(F) if such record date shall have been fixed
and such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Conversion Price shall be adjusted
pursuant to this subparagraph 2(d)(ii) as of the actual date of their issuance.
(2) Stock Dividends and Subdivisions. In the
event the corporation at any time or from time to time after the Original Issue
Date shall declare or pay any dividend or other distribution on the Common Stock
payable in Common Stock, or effect a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock), then and in any such event, Additional Shares of Common Stock
shall be deemed to have been issued:
(A) in the case of any such dividend,
immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Price of each of the respective series shall be adjusted pursuant to
this subparagraph 2(d)(ii) as of the time of actual payment of such dividend.
(iii) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
(1) No Adjustment of Conversion Price. No adjustment
in the Conversion Price of Series B Preferred
-7-
21
Stock shall be made in respect of the issuance of Additional Shares of Common
Stock or otherwise, unless the consideration per share for an Additional Share
of Common Stock issued or deemed to be issued by the corporation is less than
the lesser of Five Dollars and Twenty Cents ($5.20) or the Conversion Price in
effect on the date of, and immediately prior to, the issue of such Additional
Shares.
(2) Adjustment Mechanics. In the event the
corporation shall issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to subparagraph 2(d)(ii)
without consideration or for a consideration per share less than the lesser of
Five Dollars and Twenty Cents ($5.20) or the Conversion Price in effect on the
date of and immediately prior to such issue, then and in such event, such
Conversion Price shall be adjusted, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying Five Dollars and
Twenty Cents ($5.20) by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on the date of this Certificate of
Designations plus the number of shares of Common Stock which the aggregate
consideration received and to be received in connection with such issue by the
corporation for the total number of Additional Shares of Common Stock issued
since the date of this Certificate of Designations and to be issued would
purchase at such Five Dollars and Twenty Cents ($5.20) per share, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock to be so issued, and by adding to the result of such calculation
Forty-Three Cents ($.43); provided that, for the purpose of this subparagraph
(iii), all shares of Common Stock issuable upon conversion of outstanding
Series B Preferred Stock immediately prior to the corporation's issuance of
Additional Shares of Common Stock which triggered an adjustment pursuant to
this paragraph shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to subparagraph
(ii), such Additional Shares of Common Stock shall be deemed to be outstanding;
and provided further, that the Conversion Price shall not be so reduced at such
time if the amount of such reduction would be an amount less than Five Cents
($0.05), but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate Five Cents ($0.05) or more. In no event shall such
adjustments cause the Conversion Price to exceed Five Dollars and Sixty-Three
Cents ($5.63).
(3) Additional Adjustments. If, after the Original
Issue Date, the corporation effects a
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22
stock split or reverse stock split of the outstanding shares of Common Stock,
declares or pays any dividend or other distribution on the Common Stock
payable in Common Stock, or effects a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise), then all
references to Five Dollars and Twenty Cents ($5.20) and Forty-Three Cents
($.43), respectively, as used throughout this Section 2(d), shall, concurrently
with the effectiveness of such event, be proportionately adjusted upward or
downward (to the nearest cent) to reflect the effect of such event. Such
adjustments shall similarly be made for any subsequent events of the types
described in this subparagraph 2(d)(iii)(3).
(iv) Determination of Consideration. For purposes of
this paragraph 2(d), the consideration received by the corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the corporation excluding amounts
paid or payable for accrued interest or accrued dividends:
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of
the corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above,
as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to subparagraph 2(d)(ii)(l),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent
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adjustment of such consideration) payable to the corporation upon the exercise
of such Options or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
(3) Certain Dividends and Distributions. In the
event that the corporation at any time or from time to time after the Original
Issue Date shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock, without payment of any
consideration by such holder for the additional shares of Common Stock, then
and in each such event the maximum number of shares (as set forth in the
instrument relating thereto without regard to any provisions contained therein
for a subsequent adjustment of such number) of Common Stock issuable in payment
of such dividend or distribution shall be deemed to be issued and outstanding
as of the time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date. In each such
event the Conversion Price shall be reduced as of the time of such issuance or,
in the event such a record date shall have been fixed, as of the close of
business on such record date, to a price (calculated to the nearest cent)
determined by multiplying the Conversion Price by a fraction
(x) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed to be issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date; and
(y) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed to be issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution; provided, however, that if such
record date shall have been fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed therefor, the Conversion
Price shall be recomputed accordingly as of
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the close of business on such record date and thereafter the Conversion Price
shall be adjusted pursuant to this subparagraph 2(d)(iv)(3) as of the time of
actual payment of such dividend or distribution.
(v) Adjustment for Combinations or Subdivision of Common
Stock. In the event the outstanding shares of Common Stock shall be combined
or subdivided, by reclassification or otherwise, into a lesser or greater
number of shares of Common Stock, the Conversion Price in effect immediately
prior to such combination or subdivision shall, concurrently with the
effectiveness of such combination or subdivision, be proportionately increased
in the case of a combination or decreased in the case of a subdivision.
(vi) Adjustment for Reorganization or Reclassification of
Common Stock. In the case of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value, or as a result of a
subdivision or combination), each share of Series B Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization or reclassification
that would have been received had the Series B Preferred Stock been converted
into Common Stock on the date of such event.
(e) No Impairment. The corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 2 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series B Preferred Stock against impairment.
(f) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 2,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate
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setting forth (i) such adjustments and readjustments, (ii) the Conversion Price
at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
conversion of Series B Preferred Stock.
(g) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the corporation shall mail to each
holder of Series B Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The corporation shall reserve and
keep available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of the Series B Preferred Stock.
3. Consent to Redemption by Series B Preferred Stockholders. Each
holder of Series B Preferred Stock shall be deemed to have consented, for
purposes of Sections 502, 503 and 506 of the California General Corporations
Law, to distributions made by the corporation in connection with the repurchase
of shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing
for the right of said repurchase between the corporation and such persons.
4. Voting Rights. Except as otherwise required by law, the
holders of Series B Preferred Stock and the holders of the Common Stock shall be
entitled to notice of any shareholders' meeting and to vote upon any matter
submitted to a shareholder for a vote, on the following basis:
(a) Holders of Common Stock shall have one vote per share;
(b) Holders of Series B Preferred Stock shall have that number
of votes per share as is equal to the number of shares of Common Stock into
which each such share of Series B Preferred Stock held by such holder is
convertible;
(c) Neither the holders of the Common Stock nor the holders of
the Series B Preferred Stock shall be entitled to vote separately on any matters
as a class.
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5. Dividend Rights. The holders of outstanding Series B
Preferred Stock shall be entitled to receive in any fiscal year, when and if
declared by the Board of Directors, out of any assets at the time legally
available therefor, dividends in cash at the rate of Forty Cents ($0.40) per
share of Series B Preferred Stock per annum, before any dividend is paid on
Common Shares; provided, however, that in no event shall the Board of Directors
declare and set apart or pay a dividend on the outstanding Series B Preferred
Stock in excess of an amount equal to twenty-five percent (25%) of the
corporation's pre-tax income for such quarter, calculated in accordance with
generally accepted accounting principles, consistently applied. Such dividends
may be payable quarterly or otherwise as the Board of Directors may from time
to time determine. The right to such dividends on Series B Preferred Stock
shall not be cumulative and no right shall accrue to holders of Series B
Preferred Stock by reason of the fact that dividends on said shares are not
declared in any prior year, nor shall any undeclared or unpaid dividend bear or
accrue interest.
6. Covenants. So long as any shares of Series B Preferred Stock
shall be outstanding (as adjusted for all subdivisions and combinations), the
corporation shall not, without first obtaining the affirmative vote or written
consent of not less than a majority of such outstanding shares of Series B
Preferred Stock:
(a) amend or repeal any provision of, or add any provision to,
the corporation's Certificate of Incorporation or By-laws if such action would
alter or change the preferences, rights or privileges of, or the restrictions
provided for the benefit of, the Series B Preferred Stock;
(b) reclassify any Common Stock into shares having any
preference or priority as to dividends or assets superior to any such
preference or priority of the Series B Preferred Stock; or
(c) pay or declare any dividend other than a stock dividend or
distribution on any shares of Common Stock or apply any of its assets to the
redemption, retirement, purchase or other acquisition directly or indirectly
through subsidiaries or otherwise, of any shares of Common Stock except from
employees of the corporation upon termination of employment or pursuant to the
exercise of a contractual right of first refusal.
7. Residual Rights. All rights accruing to the outstanding
shares of the corporation not expressly provided for to the contrary in this
or any other Certificate of Designation of Series Preferred Shares shall be
vested in the Common Stock.
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27
IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Ralph A. Korpman, its President, and attested by
Charles S. Grobe, its Secretary, this 10th day of April, 1984.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Ralph A. Korpman
-----------------------------------
RALPH A. KORPMAN
President
ATTEST:
By:
---------------------------
CHARLES S. GROBE
Secretary
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STATE of California )
)ss.
COUNTY of San Bernardino )
RALPH A. KORPMAN, being first duly sworn, deposes and says that:
He is the President of the Delaware corporation herein mentioned; the
matters set forth herein are true of his own knowledge; and the signature
purporting to be the signature of said Ralph A. Korpman is his genuine
signature.
/s/ Ralph A. Korpman
----------------------------------------
RALPH A. KORPMAN
Subscribed and Sworn to before me on April __, 1984.
/s/ Katie A. Emery
---------------------------------------
NOTARY PUBLIC - Katie A. Emery
State of California
[SEAL]
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CERTIFICATE OF DESIGNATIONS OF
PREFERENCES AND RIGHTS OF
SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation (as amended) of said corporation, and pursuant to
the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, at a meeting duly convened on July 16, 1985, adopted a
resolution providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of the Preferred Shares -- Series C stock, which
resolution is as follows:
WHEREAS, the Certificate of Incorporation of this corporation provides for
a class of shares known as Preferred Stock, issuable from time to time in one
or more series; and
WHEREAS, the Board of Directors of this corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
determine or alter the rights, preferences, privileges, and restrictions
granted to or imposed upon any wholly unissued series of the Preferred Stock,
to fix the number of shares constituting any such series, and to determine the
designation thereof; and
WHEREAS, this corporation has issued only shares of Series A and Series B
Preferred Stock and the Board of Directors of this corporation desires,
pursuant to its authority as aforesaid, to fix the terms of a third series of
said Preferred Stock and the number of shares constituting and the designation
of such series;
30
RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said third series of Preferred Stock
as follows:
A. The third series of Preferred Stock shall be designated "Serial Preferred
Stock, Series C," and the number of shares constituting such Series C shall be
one million six hundred eighty-seven thousand five hundred (1,687,500).
B. The rights, preferences, privileges and restrictions of, and other matters
relating to, the Series C Preferred Stock are as follows:
1. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the corporation, the holders of each share of
Series C Preferred Stock (and the holders of each share of any other series of
Preferred Stock having the same rights on voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation) shall be entitled
to receive, prior and in preference to any distribution of any of the assets or
surplus funds of the corporation to the holders of the Common Stock of the
corporation by reason of their ownership thereof, an amount equal to Eight
Dollars ($8.00) per share.
All the preferential amounts to be paid to the holders of the Series
C Preferred Stock (and to the holders of any other such series of Preferred
Stock) under this Section 1 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of the Common Stock in connection
with such liquidation, dissolution or winding up. After the payment or the
setting apart of payment to the holders of the Series C Preferred Stock and to
the holders of any other such series of Preferred Stock of the preferential
amounts so payable to them, the holders of Common Stock shall be entitled to
receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders of
the Series C Preferred Stock are insufficient to permit the payment to such
holders and to the holders of any other such series of Preferred Stock of their
full preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Series C
Preferred Stock (and the holders of any other such series of Preferred Stock)
in proportion to the full preferential amount each such holder is otherwise
entitled to receive.
2
31
2. Conversion. The holders of the Series C Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series C Preferred Stock shall
be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the corporation or any
transfer agent for the Series C Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing Eight
Dollars ($8.00) by the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion. The Conversion Price at which shares of
Common Stock shall be deliverable upon conversion without the payment of any
additional consideration by the holder thereof (the "Conversion Price") shall
initially be Eight Dollars ($8.00) per share of Common Stock. Such initial
Conversion Price shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which the Series C Preferred Stock is
convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Series C Preferred Stock
shall automatically be converted into shares of Common Stock at the then
effective Conversion Price upon the earlier to occur of (i) the date on which
the corporation is subject to the reporting requirements of Section 13(a) of
the Securities Exchange Act of 1934, as amended, or (ii) the date on which
quotations for the Common Stock are reported by the automated quotations system
operated by the National Association of Securities Dealers, Inc., or by an
equivalent quotations system, or (iii) shares of Common Stock have been sold at
an aggregate price of Seven Million Dollars ($7,000,000) or more pursuant to a
public offering.
(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Series C Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series C Preferred Stock shall
be entitled to convert the same into full shares of Common Stock, and before the
corporation shall be obligated to issue certificates for shares of Common Stock
upon the automatic conversion of the Series C Preferred Stock as set forth in
Section 2(b) hereof, the Series C Preferred Stock holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Series C Preferred Stock and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued (except
3
32
that no such written notice of intent to convert shall be necessary in the
event of an automatic conversion pursuant to Section 2(b) hereof). The
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series C Preferred Stock, or to his nominee or
nominees, a certificate or certificates for the number of Shares of Common
Stock to which he shall be entitled as aforesaid, together with cash in lieu of
any fraction of a share. 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 C Preferred Stock to be converted (except that in the case of
an automatic conversion pursuant to Section 2(b) hereof, such conversion shall
be deemed to have been made immediately prior to the closing of the offering
referred to in Section 2(b)), and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Paragraph
2(d), the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Original Issue Date" shall mean the date on which a
share of Series C Preferred Stock was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock and Series C Preferred Stock)
or other securities directly or indirectly convertible into or exchangeable
for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Subparagraph 2(d)(ii),
deemed to be issued) by the corporation after the Original Issue Date,
other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of Series C Preferred
Stock, and Series B Preferred Stock, and Series A Preferred Stock;
(B) to officers or employees of, or consultants to,
the corporation pursuant to a stock purchase or option plan or other
employee stock incentive program
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33
(collectively, the "Plans") approved by the Board of Directors not to
exceed four hundred thousand (400,000) shares, one hundred twenty-six
thousand (126,000) of which are outstanding on the date hereof; or
(c) by way of dividend or other distribution on
shares of Common Stock excluded from the definition of Additional Shares of
Common Stock by the foregoing Clauses (A) and (B) of this Clause (C).
(ii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible Securities. In the event the
corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date; provided, that Additional Shares
of Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Subparagraph 2(b)(iv) hereof) of such
Additional Shares of Common Stock would be less than the lesser of Seven Dollars
($7.00) or the Conversion Price in effect on the date of and immediately prior
to such issue, or such record date, as the case may be; and provided further,
that in any such case in which Additional Shares of Common Stock are deemed to
be issued;
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares
of Common Stock upon the exercise of such Options or conversion or exchange
of such Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any
increase in the consideration payable to the corporation, or decrease in
the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights
of conversion or exchange under such Convertible Securities;
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34
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with
respect thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(I) in the case of Convertible Securities or
Options for Common Stock the only Additional Shares of Common Stock
issued were the shares of Common Stock, if any, actually issued upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the corporation for the issue of
all such Options, whether or not exercised, plus the consideration
actually received by the corporation upon such exercise, or for the
issue of all such Convertible Securities which were actually
converted, if any, actually received by the corporation upon such
conversion or exchange, and
(II) in the case of Options for Convertible
Securities only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the corporation for the
Additional Shares of Common Stock deemed to have been then issued was
the consideration actually received by the corporation for the issue
of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the corporation (determined pursuant
to Subparagraph 2(d)(iv)) upon the issue of the Convertible Securities
with respect to which such Options were actually exercised;
(D) no readjustment pursuant to Clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) Eight Dollars ($8.00), (ii) the Conversion
Price on the original adjustment date, or (iii) the Conversion Price that
would have resulted from any other issuance of Additional Shares of Common
Stock between the original adjustment date and such readjustment date;
(E) in the case of any Options which expire by their
terms not more than thirty (30) days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration of
exercise of all such Options, whereupon such adjustment shall be made in
the same manner provided in Clause (C) above; and
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35
(F) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date therefor, the
adjustment previously made in the Conversion Price which became effective
on such record date shall be cancelled as of the close of business on such
record date, and thereafter the Conversion Price shall be adjusted pursuant
to this Subparagraph 2(d)(ii) as of the actual date of their issuance.
(2) Stock Dividends and Subdivisions. In the event the
corporation at any time or from time to time after the Original Issue Date
shall declare or pay any dividend or other distribution on the Common Stock
payable in Common Stock, or effect a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then and in any such event, Additional Shares of
Common Stock shall be deemed to have been issued:
(A) in the case of any such dividend, immediately
after the close of business on the record date for the determination of
holders of any class of securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the adjustment
previously made in the Conversion Price which became effective on such
record date shall be cancelled as of the close of business on such record
date, and thereafter the Conversion Price of each of the respective series
shall be adjusted pursuant to this Subparagraph 2(d)(ii) as of the time of
actual payment of such dividend.
(iii) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
(1) No adjustment of Conversion Price. No adjustment
in the Conversion Price of Series C Preferred Stock shall be made in
respect to the issuance of Additional Shares of Common Stock or otherwise,
unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the corporation is less than the lesser of
Seven Dollars ($7.00) or the Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares.
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36
(2) Adjustment Mechanics. In the event the corporation
shall issue Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to Subparagraph 2(d)(ii)
without consideration or for a consideration per share less than the lesser
of Seven Dollars ($7.00) or the Conversion Price in effect on the date of
and immediately prior to such issue, then and in such event, such
Conversion Price shall be adjusted, concurrently with such issue, to a
price (calculated to the nearest cent) equal to the consideration per share
for which such Additional Shares of Common Stock are issued; provided
however, that the Conversion Price shall not be so reduced at such time if
the amount of such reduction would be an amount less than Five Cents
($0.05), but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent
reduction which, together with such amount and any other amount or amounts
so carried forward, shall aggregate Five Cents ($0.05) or more. In no event
shall such adjustments cause the Conversion Price to exceed Eight Dollars
($8.00).
(3) Additional Adjustments. If, after the Original Issue
Date, the corporation effects a stock split or reverse stock split of the
outstanding shares of Common Stock, declares or pays any dividend or other
distribution on the Common Stock payable in Common Stock, or effects a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise), then all references to Eight Dollars
($8.00) and Seven Dollars ($7.00), respectively, as used throughout this
Section 2(d), shall, concurrently with the effectiveness of such event, be
proportionately adjusted upward or downward (to the nearest cent) to
reflect the effect of such event. Such adjustments shall similarly be made
for any subsequent events of the types described in this Subparagraph
2(d)(iii)(3).
(iv) Determination of Consideration. For purposes of this
Paragraph 2(d), the consideration received by the corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the corporation excluding
amounts paid or payable for accrued interest or accrued
dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue,
as determined in good faith by the Board of Directors; and
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37
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of
such consideration so received, computed as provided in Clauses (A)
and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration
per share received by the corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Subparagraph 2(d)(ii)(1), relating
to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable
by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such consideration) payable to the
corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the conversion or exchange
of such Convertible Securities, by
(y) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities.
(3) Certain Dividends and Distributions. In the event
that the corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock, without payment of any consideration by such
holder for the additional shares of Common Stock, then and in each such event
the maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent adjustment
of such number) of Common Stock issuable in payment of such dividend or
distribution shall be deemed to be issued and outstanding as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the
close of business on such record date. In each such event the Conversion Price
shall be reduced as of the time of such issuance or, in the event such a record
date shall have been fixed, as of the close of business on such record date, to
a
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38
price (calculated to the nearest cent) determined by multiplying the
Conversion Price by a fraction
(x) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding or deemed to be
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date; and
(y) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding or deemed to be
issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price shall be adjusted pursuant to this
Subparagraph 2(d)(iv)(3) as of the time of actual payment of such
dividend or distribution.
(v) Adjustment for Combinations or Subdivision of Common Stock.
In the event the outstanding shares of Common Stock shall be combined or
subdivided, by reclassification or otherwise, into a lesser or greater number of
shares of Common Stock, the Conversion Price in effect immediately prior to such
combination or subdivision shall, concurrently with the effectiveness of such
combination or subdivision, be proportionately increased in the case of a
combination or decreased in the case of a subdivision.
(vi) Adjustment for Reorganization or Reclassification of Common
Stock. In the case of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value, or as a result of a subdivision
or combination), each share of Series C Preferred Stock shall thereafter be
convertible into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization or reclassification that would have
been received had the Series C Preferred Stock been converted into Common Stock
on the date of such event.
(e) No impairment. The corporation will not, by amendment of its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation
10
39
but will at all times in good faith assist in the carrying out of all the
provisions of this Section 2 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 C Preferred Stock against impairment:
(f) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 2,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series C Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series C Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of Series C Preferred Stock.
(g) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the corporation shall mail to each
holder of Series C Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series C Preferred Stock.
3. Consent to Redemption by Series C Preferred Stockholders. Each
holder of Series C Preferred Stock shall be deemed to have consented, for
purposes of Sections 502, 503 and 506 of the California General Corporations
Law, to distributions made by the corporation in connection with the repurchase
of shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing for
the right of said repurchase between the corporation and such persons.
4. Voting Rights. Except as otherwise required by law, the holders of
Series C Preferred Stock and the holders of the Common Stock shall be entitled
to notice of any shareholders'
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meeting and to vote upon any matter submitted to a shareholder for a vote, on
the following basis:
(a) Holders of Common Stock shall have one (1) vote per share;
(b) Holders of Series C Preferred Stock shall have that number of
votes per share as is equal to the number of shares of Common Stock into which
each such share of Series C Preferred Stock held by such holder is convertible;
(c) Neither the holders of the Common Stock nor the holders of the
Series C Preferred Stock shall be entitled to vote separately on any matters as
a class.
5. Dividend Rights. The holders of outstanding Series C Preferred
Stock shall be entitled to receive in any fiscal year, when and if declared by
the Board of Directors, out of any assets at the time legally available
therefor, dividends in cash at the rate of Fifty-Six Cents ($0.56) per share of
Series C Preferred Stock per annum, before any dividend is paid on Common
Shares; provided, however, that in no event shall the Board of Directors
declare and set apart or pay a dividend on the outstanding Series C Preferred
Stock in excess of an amount equal to twenty-five percent (25%) of the
corporation's pre-tax income for such quarter, calculated in accordance with
generally accepted accounting principles, consistently applied. Such dividends
may be payable quarterly or otherwise as the Board of Directors may from time
to time determine. The right to such dividends on Series C Preferred Stock
shall not be cumulative and no right shall accrue to holders of Series C
Preferred Stock by reason of the fact that dividends on said shares are not
declared in any prior year, nor shall any undeclared or unpaid dividend bear or
accrue interest.
6. Covenants. So long as any shares of Series C Preferred Stock
shall be outstanding (as adjusted for all subdivisions and combinations), the
corporation shall not, without first obtaining the affirmative vote or written
consent of not less than a majority of such outstanding shares of Series C
Preferred Stock:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Certificate of Incorporation or By-Laws if such action would
alter or change the preferences, rights or privileges of, or the restrictions
provided for the benefit of, the Series C Preferred Stock;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or priority
of the Series C Preferred Stock; or
(c) pay or declare any dividend other than a stock dividend or
distribution on any shares of Common Stock or apply
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any of its assets to the redemption, retirement, purchase or other acquisition
directly or indirectly, through subsidiaries or otherwise, of any shares of
Common Stock except from employees of the corporation upon termination of
employment or pursuant to the exercise of a contractual right of first refusal.
7. Residual Rights. All rights accruing to the outstanding shares of
the corporation not expressly provided for to the contrary in this or any other
Certificate of Designation of Series Preferred Shares shall be vested in the
Common Stock.
IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Ralph Korpman, its President, and attested by
Charles S. Grobe, its secretary, this 9th day of August, 1985.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Ralph A. Korpman
----------------------------
Ralph A. Korpman, President
ATTEST:
By: /s/ Charles S. Grobe
-------------------------------
Charles S. Grobe, Secretary
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42
STATE OF CALIFORNIA )
) ss.
COUNTY OF San Bernadino )
RALPH A. KORPMAN, being first duly sworn, deposes and says that:
He is the President of the Delaware corporation herein mentioned; the
matters set forth herein are true to his own knowledge; and the signature
purporting to be the signature of said Ralph A. Korpman is his genuine
signature.
/s/ Ralph A. Korpman
----------------------------------
RALPH A. KORPMAN
Subscribed and sworn to before me on August 9, 1985.
/s/ Karie A. Emery
----------------------------------
NOTARY PUBLIC - Karie A. Emery
State of California
[SEAL]
STATE OF CALIFORNIA )
) ss.
COUNTY OF San Bernardino )
CHARLES S. GROBE, being first duly sworn, deposes and says that:
He is the Secretary of the Delaware corporation herein mentioned; the
matters set forth herein are true to his own knowledge; and the signature
purporting to be the signature of said Charles S. Grobe is his genuine
signature.
/s/ Charles S. Grobe
---------------------------------
CHARLES S. GROBE
Subscribed and sworn to before me on August 9, 1985.
/s/ Karie A. Emery
---------------------------------
NOTARY PUBLIC - Karie A. Emery
State of California
[SEAL]
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HEALTH DATA SCIENCES CORPORATION
CERTIFICATE OF AMENDMENT
OF
CERTIFICATION OF INCORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of HEALTH DATA SCIENCES
CORPORATION be amended by adding the SEVENTH Article thereof so that, said
Article shall be and read as follows:
"SEVENTH: No director of the Corporation shall be personally liable to the
Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, as the same exits or hereafter may be
amended, or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law
hereafter is amended to authorize the further elimination or limitation of
the liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by the amended
Delaware General Law. Any repeal or modification of this paragraph by the
stockholders of the Corporation shall be prospective only, and shall
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44
not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with
the provisions of section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of sections 242 and 228 of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, Health Data Sciences Corporation has caused this
certificate to be signed by Charles S. Grobe, its Vice-President, and attested
by Janice Ticich, its Assistant Secretary, this 24th day of August, 1987.
By: /s/ Charles L. Grobe
--------------------------------
Charles S. Grobe
Vice-President
ATTEST:
By: /s/ Janice Ticich
--------------------------------
Janice Ticich
Assistant Secretary
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CERTIFICATE OF DESIGNATIONS OF
PREFERENCES AND RIGHTS OF
SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation (as amended) of said corporation, and pursuant to
the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, acting pursuant to an unanimous written consent dated as of
September 29, 1987, adopted a resolution providing for the designations,
preferences and relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, of the Preferred
Shares-Series D stock, which resolution is as follows:
WHEREAS, the Certificate of Incorporation of this corporation provides for
a class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of this corporation is authorized, within
the limitations and restrictions stated in the Certificate of Incorporation, to
determine or alter the rights, preferences, privileges, and restrictions granted
to or imposed upon any wholly unissued series of the Preferred Stock, to fix the
number of shares constituting any such series, and to determine the designation
thereof; and
WHEREAS, this corporation has issued only shares of Series A, Series B and
Series C Preferred Stock and the Board
46
of Directors of this corporation desires, pursuant to its authority as
aforesaid, to fix the terms of a fourth series of said Preferred Stock and the
number of shares constituting and the designation of such series;
RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said fourth series of Preferred Stock
as follows:
A. The fourth series of Preferred Stock shall be designated "Serial
Preferred Stock, Series D," and the number of shares constituting such Series D
shall be one million two hundred and fifty thousand (1,250,000) shares.
B. The rights, preferences, privileges and restrictions of, and
other matters relating to, the Series D Preferred Stock are as follows:
1. Liquidation Rights.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation, the holders of
each share of Series D Preferred Stock (and the holders of each share of any
other series of Preferred Stock having the same rights on voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
corporation) shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the corporation to the
holders of the Common Stock of the corporation by reason of their ownership
thereof, an amount equal to Twelve Dollars and Ninety Cents ($12.90) per share;
provided, however, that in the case of Series D Preferred Stock resulting from
the conversion by the corporation of any of its 10.5% Convertible Subordinated
Debentures Due September 30, 1991 (the "Debentures") in accordance with Section
6.2(c) of the Debenture Purchase Agreement dated as of September 30, 1987 (the
"Debenture Purchase Agreement") between the corporation and the purchasers
named therein, then such amount shall equal Twelve Dollars ($12.00) per share.
(b) In the event of any merger or consolidation to which the
corporation is a party or of the sale or transfer of all or substantially all
the assets of the corporation, in either case in which any holder of any other
series of Preferred Stock of the corporation receives in cash or other property
the sum of $8.00 or more, each holder of each share of Series D Preferred
Stock, solely at its option, shall be entitled to receive, prior and in
preference to any
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47
distribution of any of the assets or surplus of the corporation to the holders
of the Common Stock of the corporation by reason of their ownership thereof, an
amount equal to Twelve Dollars ($12.00) per share.
(c) All the preferential amounts to be paid to the holders of the
Series D Preferred Stock (and to the holders of any other such series of
Preferred Stock) under this Section 1 shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the corporation to, the holders of the Common
Stock in connection with such liquidation, dissolution or winding up. After
the payment or the setting apart of payment to the holders of the Series D
Preferred Stock and to the holders of any other such series of Preferred Stock
of the preferential amounts so payable to them, the holders of Common Stock
shall be entitled to receive all remaining assets of the corporation.
(d) If the assets or surplus funds to be distributed to the holders
of the Series D Preferred Stock are insufficient to permit the payment to such
holders and to the holders of any such series of Preferred Stock of their full
preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Series D
Preferred Stock (and the holders of any other such series of Preferred Stock) in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
2. Conversion. The holders of the Series D Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series D Preferred Stock
shall be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the corporation or any transfer
agent for the Series D Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing (i) in the
case of Series D Preferred Stock resulting from the conversion by the
corporation of any of the Debentures in accordance with Section 6.2(c) of the
Debenture Purchase Agreement, Twelve Dollars ($12.00) or (ii) in the case of
Series D Preferred Stock resulting from the conversion of Debentures in
accordance with Sections 6.2(a) or 6.2(b) of the Debenture Purchase Agreement,
Twelve Dollars and Ninety Cents ($12.90), by the Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion Price
at
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which shares of Common Stock shall be deliverable upon conversion without the
payment of any additional consideration by the holder thereof (the "Conversion
Price") shall initially be Twelve Dollars and Ninety Cents ($12.90) per share
of Common Stock (the "Initial Conversion Price"); provided, however, that if
conversion is effected by the corporation pursuant to Section 6.2(c) of the
Debenture Purchase Agreement, then such Initial Conversion Price shall be
$12.00 per share and appropriate adjustments to the Conversion Price shall be
made pursuant to Section 2(d)(vii) hereof. Such Initial Conversion Price shall
be subject to adjustment, in order to adjust the number of shares of Common
Stock into which the Series D Preferred Stock is convertible, as hereinafter
provided.
(b) Automatic Conversion. Each share of Series D Preferred Stock
shall automatically be converted into shares of Common Stock at the then
effective Conversion Price upon the earlier to occur of (i) the closing date
of a registration by the Company of any of its securities pursuant to a firm
commitment underwritten public offering at a per share public offering price of
not less than $18.00 (adjusted for any stock split, combination or similar
event) and an aggregate public offering price of not less than $7,000,000 of
any of its securities on Form S-1 (or any successor or reasonably equivalent
forms) under the Securities Act (other than the registration of a stock option
or purchase, thrift, reinvestment, compensation or similar plan or of
securities issued or issuable pursuant to such plan, or of securities issued or
issuable in connection with a merger of the Company or the acquisition of
securities or assets by the Company); or (ii) a merger or consolidation
involving the Company or a sale of all or substantially all of the assets of
the Company in which the holders of the Common Stock of the Company shall
receive in cash an amount at least equal to $18.00 per share (on the date of
effectiveness of such merger or consolidation or on the date of distribution to
stockholders of the Company of the proceeds from such sale of assets).
(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Series D Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Series D Preferred Stock
shall be entitled to convert the same into full shares of Common Stock, and
before the corporation shall be obligated to issue certificates for shares of
Common Stock upon the automatic conversion of the Series D Preferred Stock as
set forth in Section 2(b) hereof, the Series D Preferred Stock holder shall
surrender the certificate or certificates
4
49
therefor, duly endorsed, at the office of the corporation or of any transfer
agent for the Series D Preferred Stock and shall give written notice to the
corporation at such office that he elects to convert the same and shall state
therein his name or the name or names of his nominees in which he wishes the
certificate or certificates for shares of Common Stock to be issued (except
that no such written notice of intent to convert shall be necessary in the
event of an automatic conversion pursuant to Section 2(b) hereof). The
corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series D Preferred Stock, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common
Stock to which he shall be entitled as aforesaid, together with cash in lieu of
any fraction of a share. 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 D Preferred Stock to be converted (except that in the case of
an automatic conversion pursuant to Section 2(b) hereof, such conversion shall
be deemed to have been made immediately prior to the closing of the offering
referred to in Section 2(b)), and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Paragraph 2(d),
the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(2) "Original Issue Date" shall mean the date on which a
share of Series D Preferred Stock was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock and Series D
Preferred Stock) or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Subparagraph
2(d)(ii), deemed to be issued) by the corporation after the
Original Issue Date, other than shares of Common Stock issued or
issuable:
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50
(A) Upon conversion of shares of Series D Preferred Stock,
Series C Preferred Stock, and Series B Preferred Stock, and Series A
Preferred Stock;
(B) to officers or employees of, or consultants to, the
corporation pursuant to a stock purchase or option plan or other employee
stock incentive program (collectively, the "Plans") approved by the Board
of Directors not to exceed seven hundred and fifty thousand (750,000)
shares, Two Hundred Ten Thousand Three Hundred Fifty (210,350) of which
are outstanding on the date hereof; or
(C) by way of dividend or other distribution on shares of
Common Stock excluded from the definition of Additional Shares of Common
Stock by the foregoing Clauses (A) and (B) or this Clause (C).
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible Securities. In the event the
corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date
for the determination of holders of any class of securities entitled to receive
any such Options or Convertible Securities, then the maximum number of shares
(as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date; provided, that
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subparagraph
2(b)(iv) hereof) of such Additional Shares of Common Stock would be less than
the lesser of Nine Dollars and Fifty Cents ($9.50) or the Conversion Price in
effect on the date of and immediately prior to such issue, or such record date,
as the case may be; and provided further, that in any such case in which
Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of
such Convertible Securities;
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51
(B) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Conversion Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion
or exchange under such Convertible Securities;
(C) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not
have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(I) in the case of Convertible Securities or Options
for Common Stock the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise
of such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the corporation for the issue of all
such Options, whether or not exercised, plus the consideration actually
received by the corporation upon such exercise, or for the issue of all
such Convertible Securities which were actually converted, if any,
actually received by the corporation upon such conversion or exchange,
and
(II) in the case of Options for Convertible Securities
only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at a time of issue of such Options, and
the consideration received by the corporation for the Additional Shares
of Common Stock deemed to have been then issued was the consideration
actually received by the corporation for the issue of all such Options,
whether or not exercised, plus the consideration deemed to have been
received by the corporation (determined pursuant to Subparagraph
2(d)(iv) upon the issue of
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52
the Convertible Securities with respect to which such Options were
actually exercised;
(D) no readjustment pursuant to Clause (B) or (C) above
shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Initial Conversion Price, (ii) the
Conversion Price on the original adjustment date, or (iii) the Conversion
Price that would have resulted from any other issuance of Additional
Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) in the case of any Options which expire by their terms
not more than thirty (30) days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration of
exercise of all such Options, whereupon such adjustment shall be made in
the same manner provided in Clause (C) above; and
(F) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which
became effective on such record date shall be cancelled as of the close of
business on such record date, and thereafter the Conversion Price shall be
adjusted pursuant to this Subparagraph 2(d)(ii) as of the actual date of
their issuance.
(2) Stock Dividends and Subdivisions. In the event the
corporation at any time or from time to time after the Original Issue Date
shall declare or pay any dividend or other distribution on the Common
Stock payable in Common Stock, or effect a subdivision of the outstanding
Common Stock (by reclassification or otherwise then by payment of a
dividend in Common Stock), then and in any such event, Additional Shares
of Common Stock shall be deemed to have been issued:
(A) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of
any class of securities entitled to receive such dividend, or
(B) in the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such
corporate action becomes effective.
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53
If such record date shall have been fixed and such dividend
shall not have been fully paid on the date fixed therefor, the adjustment
previously made in the Conversion Price which became effective on such
record date shall be cancelled as of the close of business on such record
date, and thereafter the Conversion Price of each of the respective series
shall be adjusted pursuant to this Subparagraph 2(d)(ii) as of the time of
actual payment of such dividend.
(iii) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
(1) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of Series D Preferred Stock shall be made in respect to
the issuance of Additional Shares of Common Stock or otherwise, unless the
consideration per share for an Additional Share of Common Stock issued or
deemed to be issued by the corporation is less than the lesser of Nine
Dollars and Fifty Cents ($9.50) or the Conversion Price in effect on the
date of, and immediately prior to, the issue of such Additional Shares.
(2) Adjustment Mechanics. In the event the corporation
shall issue Additional Shares of Common Stock (including Additional Shares
of Common Stock deemed to be issued pursuant to Subparagraph 2(d)(ii))
without consideration or for a consideration per share less than the
lesser of Nine Dollars and Fifty Cents ($9.50) or the Conversion Price
in effect on the date of and immediately prior to such issue, then and in
such event, such Conversion Price shall be adjusted, concurrently with
such issue, to a price (calculated to the nearest cent) equal to the
consideration per share for which such Additional Shares of Common Stock
are issued; provided however, that the Conversion Price shall not be so
reduced at such time if the amount of such reduction would be an amount
less than Five Cents ($0.05), but any such amount shall be carried forward
and reduction with respect thereto made at the time of and together with
any subsequent reduction which, together with such amount and any other
amount or amounts so carried forward, shall aggregate Five Cents ($0.05)
or more. In no event shall such adjustments cause the Conversion Price to
exceed the Initial Conversion Price.
(3) Additional Adjustments. If, after the Original Issue
Date, the corporation effects a stock split or reverse stock split of the
outstanding shares of Common Stock, declares or pays any dividend or other
9
54
distribution on the Common Stock payable in Common Stock, or effects a
subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise), then all references to the Initial
Conversion Price and Nine Dollars and Fifty Cents ($9.50), respectively, as
used throughout this Section 2(d), shall, concurrently with the
effectiveness of such event, be proportionately adjusted upward or downward
(to the nearest cent) to reflect the effect of such event. Such adjustments
shall similarly be made for any subsequent events of the types described in
this Subparagraph 2(d)(iii)(3).
(iv) Determination of Consideration. For purposes of this
Paragraph 2(d), the consideration received by the corporation for the issue of
any Additional Shares of Common stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue,
as determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of
the corporation for consideration which covers both, be the proportion
of such consideration so received, computed as provided in Clauses (A)
and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration per
share received by the corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Subparagraph 2(d)(ii)(1), relating
to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by
the corporation as consideration for the issue of such Options or
Convertible Securities,
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55
plus the minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities
and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities.
(3) Certain Dividends and Distributions. In the event that
the corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of
holders of Common stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock, without payment
of any consideration by such holder for the additional shares of Common
Stock, then and in each such event the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common
Stock issuable in payment of such dividend or distribution shall be deemed
to be issued and outstanding as of the time of such issuance or, in the
event such a record date shall have been fixed, as of the close of business
on such record date. In each such event the Conversion Price shall be
reduced as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such a record date,
to a price (calculated to the nearest cent) determined by multiplying the
Conversion Price by a fraction
(x) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding or deemed to be issued
and outstanding immediately prior to the time of such issuance or the
close of business on such record date; and
(y) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding or deemed to be issued
and outstanding immediately prior to the time of such issuance or
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56
the close of business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or distribution;
provided, however, that if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record date
and thereafter the Conversion Price shall be adjusted pursuant to this
Subparagraph 2(d)(iv)(3) as of the time of actual payment of such
dividend or distribution.
(v) Adjustment for Combinations or Subdivision of Common
Stock. In the event the outstanding shares of Common Stock shall be combined
or subdivided, by reclassification or otherwise, into a lesser or greater
number of shares of Common Stock, the Conversion Price in effect immediately
prior to such combination or subdivision shall, concurrently with the
effectiveness of such combination or subdivision, be proportionately increased
in the case of a combination or decreased in the case of a subdivision.
(vi) Adjustment for Reorganization or Reclassification of
Common Stock. In the case of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value, or as a result of a
subdivision or combination), each share of Series D Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization or reclassification
that would have been received had the Series D Preferred Stock been converted
into Common Stock on the date of such event.
(vii) Adjustments of Initial Conversion Price.
Notwithstanding anything herein to the contrary, for purposes of making
adjustments of the Conversion Price pursuant to this Section 2(d) all
adjustments shall be made on the basis of an Initial Conversion Price of $12.90
per share; provided, however, that in the event of a conversion effected by the
Company pursuant to Section 6.2(c) of the Debenture Purchase Agreement, then
all prior adjustments to the Conversion Prices (with respect to the shares so
converted) shall be recalculated and further adjusted on the basis of an
Initial Conversion Price of $12.00 per share.
(e) No Impairment. The corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger,
12
57
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the corporation but will at all times in
good faith assist in the carrying out of all the provisions of this Section 2
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 D Preferred
Stock against impairment.
(f) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 2,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series D Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series D Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of Series D Preferred
Stock.
(g) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the corporation shall mail to each
holder of Series D Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion
of the Series D Preferred Stock.
3. Consent to Redemption by Series D Preferred Stockholders. Each
holder of Series D Preferred Stock shall be deemed to have consented, for
purposes of Sections 502, 503 and 506 of the California General Corporations
Law, to distributions made by the corporation in connection with the repurchase
of shares of Common Stock issued to or held by
13
58
employees or consultants upon termination of their employment or services
pursuant to agreements providing for the right of said repurchase between the
corporation and such persons.
4. Voting Rights. Except as otherwise required by law, the holders of
Series D Preferred Stock and the holders of the Common Stock shall be entitled
to notice of any shareholders' meeting and to vote upon any matter submitted to
a shareholder for a vote, on the following basis:
(a) Holders of Common Stock shall have one (1) vote per share;
(b) Holders of Series D Preferred Stock shall have that number of
votes per share as is equal to the number of shares of Common Stock into which
each such share of Series D Preferred Stock held by such holder is then
convertible; and
(c) Neither the holders of the Common Stock nor the holders of the
Series D Preferred Stock shall be entitled to vote separately on any matters
as a class (except to the extent otherwise provided herein or in the Debenture
Purchase Agreement).
5. Dividend Rights. (a) The holders of Series D Preferred Stock
which resulted from a conversion of the Debentures, which conversion was
effected by the corporation in accordance with the provisions of Section 6.2(c)
of the Debenture Purchase Agreement, shall be entitled to receive in each
fiscal year, out of assets at that time legally available therefor, mandatory
cumulative dividends in cash at the rate of one dollar and twenty-six cents
($1.26) per share of Series D Preferred Stock per annum (subject to adjustment
for stock splits and stock dividends), payable quarterly on January 1, April 1,
July 1, and October 1 of each year; provided, however, that if the corporation
fails to pay such dividend on any shares of the Series D Preferred Stock within
10 business days of such payment dates, the dividend rate shall increase to one
dollar and fifty cents ($1.50) per annum until all unpaid dividends are paid in
full (at which time the aforesaid dividend rate shall again become effective;
provided, further that the dividend rights provided for in this Section 5(a)
shall terminate on September 30, 1991, at which time the dividend rights set
forth in Section 5(b) below shall become applicable to all shares of Series D
Preferred Stock. Dividends shall accrue on each share from the date of their
original issuance, and shall accrue from day to day, whether or not earned or
declared. Such dividends shall be cumulative so that, except as provided in
Section 5(c) below, if such dividends in respect of any previous or current
14
59
quarterly dividend period, at the annual rate specified above, shall not have
been paid, the deficiency shall first be fully paid before any dividend or
other distribution shall be made on or declared and set apart for any other
series of Preferred Stock of the corporation or Common Stock. Any accumulation
of dividends on the Series D Preferred Stock shall not bear interest.
(b) The holders of Series D Preferred Stock which resulted from a
conversion of the Debentures, which conversion was effected by a holder of such
Debenture, in accordance with the provisions of Section 6.2(b) of the Debenture
Purchase Agreement, shall be entitled to receive in any fiscal year, when and if
declared by the Board of Directors, out of assets at any time legally available
therefor, dividends at the rate declared by the Board of Directors from time to
time on each outstanding share of Series D Preferred Stock, payable in
preference and priority to any dividend on any shares of Common Stock.
(c) Unless full dividends on the Series D Preferred Stock for all
past dividend periods and the then current dividend periods shall have been
paid: (A) no dividend whatsoever (other than a dividend payable solely in
Common Stock) shall be paid or declared, and no distribution shall be made, on
any other series of Preferred Stock of the corporation or Common Stock, and (B)
no shares of Common Stock or other series of Preferred Stock shall be
purchased, redeemed or acquired by the corporation, except for purchases of
Common Stock for employees whose employment with the Company has been
terminated, and no funds shall be paid into or set aside or made available for
sinking fund for the purchase, redemption or acquisition thereof.
(d) Notwithstanding anything herein to the contrary, the holders of
Series D Preferred Stock may initiate and maintain an action in either law or
equity in any appropriate forum in order to enforce the provisions of this
Section 5, including, without limitation, the seeking of specific performance
of the payment of dividends as herein specified.
6. Covenants. So long as any shares of Series D Preferred Stock
or any of the Debentures shall be outstanding (as adjusted for all subdivisions
and combinations), the corporation shall not, without first obtaining the
affirmative vote or written consent of not less than a majority of such
outstanding shares of Series D Preferred Stock:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Certificate of
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60
Incorporation or By-Laws if such action would alter or change the preferences,
rights or privileges of, or the restrictions provided for the benefit of, the
Series D Preferred Stock;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to any such preference or priority
of the Series D Preferred Stock; or
(c) pay or declare any dividend other than a stock dividend or
distribution on any shares of Common Stock or apply any of its assets to the
redemption, retirement, purchase or other acquisition directly or indirectly,
through subsidiaries or otherwise, of any shares of Common Stock except from
employees of the corporation upon termination of employment or pursuant to the
exercise of a contractual right of first refusal.
7. Residual Rights. All rights accruing to the outstanding shares of
the corporation not expressly provided for to the contrary in this or any other
Certificate of Designation of Series Preferred Shares shall be vested in the
Common Stock.
IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Janice E. Ticich, its Vice President, and attested
by Charles S. Grobe, its Secretary, this 29th day of September, 1987.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Janice E. Ticich
----------------------------
JANICE E. TICICH,
Vice President
ATTEST:
By: /s/ Charles S. Grobe
---------------------------
CHARLES S. GROBE, Secretary
16
61
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
JANICE E. TICICH, being first duly sworn, deposes and says that:
She is the Vice President of the Delaware corporation herein mentioned;
the matters set forth herein are true to her own knowledge; and the signature
purporting to be the signature of said Janice E. Ticich is her genuine
signature.
/s/ Janice E. Ticich
----------------------------------
JANICE E. TICICH
Subscribed and sworn to before me on September 29, 1987.
/s/ Lois A. Lara
----------------------------------
[SEAL] NOTARY PUBLIC
State of California
STATE OF CALIFORNIA )
) ss.
COUNTY OF )
CHARLES S. GROBE, being first duly sworn, deposes and says that:
He is the Secretary of the Delaware corporation herein mentioned; the
matters set forth herein are true to his own knowledge; and the signature
purporting to be the signature of said Charles S. Grobe is his genuine
signature.
/s/ Charles S. Grobe
----------------------------------
CHARLES S. GROBE
Subscribed and sworn to before me on September 29, 1987.
/s/ Suzanne R. Taix
----------------------------------
NOTARY PUBLIC
State of California
[SEAL]
17
62
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF DESIGNATIONS OF
PREFERENCES AND RIGHTS OF
SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation (as amended) of said corporation, and pursuant
to the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, acting pursuant to a unanimous written consent dated as of
November 25, 1987, adopted a resolution providing for the decrease in the
number of authorized shares of the Serial Preferred Shares - Series D Stock,
which resolution is as follows:
WHEREAS, this corporation on September 30, 1987, filed with
the Office of the Delaware Secretary of State a Certificate of
Designations of Preferences and Rights of Serial Preferred Shares of
this corporation, relating to one million two hundred fifty thousand
(1,250,000) shares of this corporation's Serial Preferred Stock, Series
D Stock (the "Series D Stock"); and
WHEREAS, this corporation desires to decrease the number of
authorized shares constituting the Series D Stock;
RESOLVED, that the number of authorized shares of Series D
Stock be and is hereby reduced to five hundred eighty-three thousand
three hundred thirty-four (583,334) shares and,
63
accordingly, that the number of shares constituting the Series D Stock
as set forth in Paragraph A of the Certificate of Designations of
Preferences and Rights relating to the Series D Stock is hereby
amended to read "five hundred eighty-three thousand three hundred
thirty-four (583,334) shares";
RESOLVED FURTHER, that such Certificate of Designations of
Preferences and Rights, as amended hereby, is hereby confirmed,
approved and ratified in all respects; and
RESOLVED FURTHER, that the officers of this corporation are
hereby authorized and directed to: (i) execute and file with the
Office of the Delaware Secretary of State a Certificate of Amendment
of Certificate of Designations of Preferences and Rights of Serial
Preferred Shares, which shall set forth a statement that the decrease
authorized herein has been authorized and directed by the Board of
Directors; and (ii) take such other actions as may be necessary or
advisable to give effect to the foregoing resolutions.
IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused
this Certificate to be signed by Janice E. Ticich, its Vice President, and
attested by Charles S. Grobe, its Secretary, this 27th day of November, 1987.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Janice E. Ticich
--------------------------------
JANICE E TICICH,
Vice President
ATTEST:
By: /s/ Charles S. Grobe
------------------------
CHARLES S. GROBE,
Secretary
64
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
JANICE E. TICICH, being the first duly sworn, deposes and says that:
She is the Vice President of the Delaware corporation herein mentioned;
the matters set forth herein are true to her own knowledge; and the signature
purporting to be the signature of said Janice E. Ticich is her genuine
signature.
/s/ Janice E. Ticich
-----------------------------------
JANICE E. TICICH
Subscribed and sworn to before me on Nov. 29, 1987.
/s/ Lois A. Lara
-----------------------------------
NOTARY PUBLIC
State of California
[SEAL]
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
CHARLES S. GROBE, being the first duly sworn, deposes and says that:
He is the Secretary of the Delaware corporation herein mentioned; the
matters set forth herein are true to his own knowledge; and the signature
purporting to be the signature of said Charles S. Grobe is his genuine
signature.
/s/ Charles S. Grobe
-----------------------------------
CHARLES S. GROBE
Subscribed and sworn to before me on 11-27, 1987.
/s/ Suzanne R. Taix
-----------------------------------
NOTARY PUBLIC
State of California
[SEAL]
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CERTIFICATE OF DESIGNATIONS OF
PREFERENCES AND RIGHTS OF
SERIES E PREFERRED STOCK OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation (as amended) of the corporation, and pursuant
to the provisions of Section 151 of Title 8 of the Delaware Code of 1953, the
Board of Directors, acting pursuant to a unanimous written consent, adopted
resolutions providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of an additional series of Preferred Stock, which
resolution is as follows:
WHEREAS, the Certificate of Incorporation of the corporation provides
for a class of shares known as Preferred Stock, issuable from time to time in
one or more series; and
WHEREAS, the Board of Directors of the corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation, to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of the
Preferred Stock, to fix the number of shares constituting any such series, and
to determine the designation thereof; and
WHEREAS, the corporation has issued shares of Series A, Series B,
Series C and Series D Preferred Stock; and the Board of Directors desires, to
fix the terms of an additional series of Preferred Stock;
RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, an additional series of Preferred
Stock as follows:
A. The additional series of Preferred Stock shall be designated
"Series E Preferred Stock" and the number of shares constituting the Series E
Preferred Stock shall be 830,000 shares.
B. The rights, preferences, privileges and restrictions of, and
other matters relating to, the Series E Preferred Stock are as follows:
66
1. Liquidation Rights.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the affairs of the corporation ("Liquidation")
during the period from the date of the issuance of the Series E Preferred
Stock, which shall be issued on a single date ("Original Issue Date") through
the first anniversary of the Original Issue Date, the assets of the corporation
available for distribution to stockholders after the payment or provision for
the payment of all claims against the corporation has been made in accordance
with applicable law ("Net Assets"), shall be distributed as follows: the
holders of the Series E Preferred Stock shall be first entitled to receive
$10.00 per share, plus any declared and unpaid dividends; thereafter, the
holders of all other shares of Preferred Stock shall then be entitled to
receive an amount equal to their respective liquidation preferences, plus any
declared and unpaid dividends; the holders of the Common Stock shall then be
entitled to receive $4.00 per share, plus any declared and unpaid dividends; and
the holders of the Series E Preferred Stock and Common Stock shall then be
entitled to receive all remaining Net Assets ratably based on the number of
shares of stock each holder owns compared to the total number of shares of
Series E Preferred Stock and Common Stock then outstanding.
(b) In the event of any Liquidation during the period commencing
immediately after the first anniversary of the Original Issue Date through the
second anniversary of the Original Issue Date, the Net Assets shall be
distributed as follows: the holders of the Series E Preferred Stock shall first
be entitled to receive $10.00 per share, plus any declared and unpaid dividend;
thereafter, the holders of all other shares of Preferred Stock shall then be
entitled to receive an amount equal to their respective liquidation
preferences, plus any declared and unpaid dividends; the holders of the Common
Stock shall then be entitled to receive $3.00 per share, plus any declared and
unpaid dividend; and the holders of the Series E Preferred Stock and Common
Stock shall then be entitled to receive all remaining Net Assets ratably based
on the number of shares of stock each holder owns compared to the total number
of shares of the Series E Preferred Stock and Common Stock then outstanding.
(c) In the event of any Liquidation during the period commencing
immediately after the second anniversary of the Original Issue Date, the Net
Assets shall be distributed as follows: the holders of the Series E Preferred
Stock shall first be entitled to receive $10.00 per share, plus any declared
and unpaid dividends; thereafter, the holders of all other shares of Preferred
Stock shall then be entitled to receive an amount equal to their respective
liquidation preferences, plus any declared and unpaid dividends; and the
holders of the Common Stock shall then be entitled to receive all remaining Net
Assets.
(d) Any of the following events shall also be deemed to
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be a Liquidation for purposes of the Series E Preferred Stock, but not for any
other series of Preferred Stock or for any other purpose: the consolidation of
the corporation with another corporation (other than a wholly-owned subsidiary);
the merger of the corporation into another corporation (other than a
wholly-owned subsidiary); the sale of all or substantially all of the assets of
the corporation (other than to a wholly-owned subsidiary); the sale of shares
representing a majority of the outstanding voting stock of the Corporation in a
single transaction or in a series of related transactions to any person or
persons who are not employees and/or directors of the corporation on the date of
the filing of this Certificate of Designations with the Delaware Secretary of
State, members of their families or trusts of which they are trustees,
beneficiaries or remaindermen ("Sale of Control Event"). Upon any such event,
the value of the corporation shall be determined by the Board of Directors in
good faith, and such value shall be deemed to be equal to the Net Assets. The
distributions to the holders of the Series E Preferred Stock pursuant to
subparagraphs (a), (b) or (c) above shall be made in the form of cash and/or the
same securities to be received by the holders of the Common Stock in connection
with such consolidation or merger or the same securities to be received by the
corporation in connection with such sale of assets or the same securities to be
received by the sellers in connection with such sale of shares. Such securities
shall be deemed to have the value determined by the Board of Directors in good
faith. For purposes of this subparagraph (d), "outstanding voting stock" shall
mean the outstanding shares of Common Stock, plus the number of shares of Common
Stock into which any outstanding shares of Preferred Stock are at the time
convertible.
2. Conversion.
The holders of the Series E Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Optional Conversion. Each share of Series E Preferred Stock
shall be convertible, without the payment of any additional consideration by the
holder and at the option of the holder at any time after the Original Issue
Date, at the office of the corporation or any transfer agent for the Series E
Preferred Stock, into such number of fully paid and non-assessable shares of
Common Stock as is determined by dividing $10.00 by the Conversion Price (as
hereinafter defined). The Conversion Price shall initially be $10.00, and shall
be subject to adjustment as hereinafter provided. "Conversion Price" shall mean
the Conversion Price from time to time in effect after giving effect to all
prior adjustment(s).
(b) Automatic Conversion. Each share of Series E Preferred Stock
shall automatically be converted into shares of Common Stock at the Conversion
Price upon the closing date of a sale of any of the Common Stock in a firm
commitment underwritten public offering pursuant to a registration statement on
Form S-1 (or any successor or reasonably equivalent
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forms) under the Securities Act of 1933, as amended (other than the
registration of a stock option, purchase, thrift, reinvestment, compensation or
similar plan or of securities issued or issuable pursuant to such plan, or of
securities issued or issuable in connection with a merger of the Corporation or
the acquisition of securities or other assets by the Corporation) (an "IPO"),
at a per share purchase price of not less than $15.00 and an aggregate purchase
price of not less than $7,000,000.
(c) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued. In lieu thereof, the corporation shall pay cash equal to such
fraction multiplied by the Conversion Price. Before the corporation shall be
obligated to issue certificates for shares of Common Stock upon conversion
pursuant to Subparagraph 2(a) or upon automatic conversion pursuant to
Subparagraph 2(b), the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the corporation or any transfer agent
for the Series E Preferred Stock and shall give written notice to the
corporation at such office that he elects to convert the same and shall state
therein his name or the name or names of his nominees in which he wishes the
certificate(s) for shares of Common Stock to be issued (except that no such
written notice of intent to convert shall be necessary in the event of
automatic conversion pursuant to Subparagraph 2(b)). The corporation shall, as
soon as practicable thereafter, issue and deliver at such office to the holder,
or to his nominee or nominees, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid, together
with cash in lieu of any fraction of a share. The conversion shall be deemed to
have been made immediately prior to the close of business on the date of the
surrender of the shares to be converted (except that in the case of an
automatic conversion pursuant to Subparagraph 2(b), the conversion shall be
deemed to have been made immediately prior to the closing of the sale referred
to in Subparagraph 2(b) and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on that
date.
(d) Adjustment of Conversion Price upon Event of Liquidity.
"Event of Liquidity" shall mean an IPO, the consolidation of the corporation
with another corporation (other than a wholly-owned subsidiary), the merger of
the corporation into another corporation (other than a wholly-owned
subsidiary), the sale of all or substantially all of the assets of the
corporation (other than to a wholly-owned subsidiary) or a Sale of Control
Event. If an Event of Liquidity occurs after November 1, 1995, and before
November 1, 1996, the Conversion Price shall become $9.00. If an Event of
Liquidity occurs on or after November 1, 1996, the Conversion Price shall
become $8.00.
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(e) Adjustments to Conversion Price:
(1) Special Definitions. For purposes of this
Subparagraph 2(e), the following definitions shall apply:
(1) "Option" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities.
(2) "Convertible Securities" shall mean any
evidences of indebtedness, shares (other than Common Stock and Series
E Preferred Stock) or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(3) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued (or, pursuant to Subparagraph
2(e)(ii), deemed to be issued) by the corporation after the Issuance
Date, other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of
Series B Preferred Stock, Series C Preferred Stock and Series E
Preferred Stock;
(B) to officers, directors or
employees of, or consultants to, the corporation pursuant to a stock
purchase or option plan or other employee stock incentive program
(collectively, the "Plans") approved by the Board of Directors, not to
exceed 800,000 shares in the aggregate;
(C) by way of dividend or other
distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing Clauses (A) and (B)
or this Clause (C).
(ii) Issue of Securities Deemed Issue of
Additional Shares of Common Stock.
(1) Options and Convertible
Securities. In the event the corporation at any time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive Options or Convertible Securities, then the number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefore, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date; provided, that
Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Subparagraph
2(e)(iv)) of such Additional Shares of Common Stock would be
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less than the Conversion Price prior to such issue, or such record date, as the
case may be; prior to such issue, or such record date, as the case may be; and
provided further, that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(A) no further adjustment in the
Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the
corporation, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(C) upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price
computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration, be recomputed as if:
(I) in the case of
Convertible Securities or Options for Common Stock the only
Additional Shares of Common Stock issued were the shares of
Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such
Convertible Securities and the consideration received
therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not
exercised, plus the consideration actually received by the
corporation upon such exercise, or for the issue of all such
Convertible Securities which were actually converted, if any,
actually received by the corporation upon such conversion of
exchange, and
(II) in the case of Options
for Convertible Securities only the Convertible Securities,
if any, actually issued upon the exercise thereof were issued
at the time of issue of such Options, and the consideration
received by the corporation for the Additional Shares of
Common
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Stock deemed to have been then issued was the consideration
actually received by the corporation for the issue of all
such Options, whether or not exercised, plus the
consideration deemed to have been received by the corporation
(determined pursuant to Subparagraph 2(e)(iv)) upon the issue
of the Convertible Securities with respect to which such
Options were actually exercised;
(D) no readjustment pursuant to Clause (B) or
(C) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lowest of (i) $10.00,
(ii) the Conversion Price on the original adjustment date, or
(iii) the Conversion Price that would have resulted from any
other issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date;
(E) in the case of any Options which expire by
their terms not more than 30 days after the date of issue
thereof, no adjustment of the Conversion Price shall be made
until the expiration of exercise of all such Options,
whereupon such adjustment shall be made in the same manner
provided in Clause (C) above; and
(F) if such record date shall have been fixed
and such Options or Convertible Securities are not issued on
the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record
date shall be cancelled as of the close of business on such
record date, and thereafter the Conversion Price shall be
adjusted pursuant to this Subparagraph 2(e)(ii) as of the
actual date of their issuance.
(2) Stock Dividends and Stock Splits. In the event the
corporation at any time or from time to time after the
Original Issue Date shall declare or pay any dividend or
other distribution on the Common Stock payable in Common
Stock, or effect a stock split or reverse stock split of the
outstanding Common Stock, then and in any such event,
Additional Shares of Common Stock shall be deemed to have
been issued:
(A) in the case of any such dividend,
immediately after the close of business on the record date
for the determination of holders of any class of securities
entitled to receive such dividend, or
(B) in the case of any such split, at the close
of business on the date immediately prior
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to the effective date of such split.
If such record date shall have been fixed and such
dividend shall not have been fully paid on the date fixed
therefor, the adjustment previously made in the Conversion
Price which became effective on such record date shall be
cancelled as of the close of business on such record date,
and thereafter the Conversion Price shall be adjusted
pursuant to this Subparagraph 2(e)(ii) as of the time of
actual payment of such dividend.
(iii) Adjustment of Conversion Price upon
Issuance of Additional Shares of Common Stock.
(1) No Adjustment of Conversion Price.
No adjustment in the Conversion Price shall be made in
respect to the issuance of Additional Shares of Common Stock,
unless the consideration per share for any Additional Share
of Common Stock issued or deemed to be issued by the
corporation is less than the Conversion Price in effect
immediately prior to the issue of such Additional Shares.
(2) Adjustment Mechanics. In the event
that before November 1, 1997, the corporation shall issue
Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to
Subparagraph 2(e)(ii)) for a consideration per share less
than the lesser of $10.00 or the Conversion Price in effect
on the date of and immediately prior to such issue, then and
in such event, such Conversion Price shall be adjusted,
concurrently with such issue, to a price (calculated to the
nearest cent) equal to the consideration per share for which
such Additional Shares of Common Stock are issued; provided
however, that the Conversion Price shall not be so reduced at
such time if the amount of such reduction would be an amount
less than $0.05, but any such amount shall be carried forward
and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with
such amount and any other amount or amounts so carried
forward, shall aggregate $0.05 or more. In no event shall
such adjustments cause the Conversion Price to exceed $10.00.
(3) Additional Adjustments. If, the
corporation effects a stock split or reverse stock split of
the outstanding shares of Common Stock, declares or pays any
dividend or other distribution on the Common Stock payable in
Common Stock, then all references herein to $15.00, $10.00,
$9.00 and $8.00 shall, concurrently with the effective date
of such event, be proportionately adjusted (to the
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nearest cent) to reflect the effect of such event as described in
Subparagraphs 2(e)(iv)(3) and 2(a)(v). Such adjustments shall
similarly be made for any subsequent events of the types described
in this Subparagraph 2(e)(iii)(3).
(iv) Determination of Consideration. The consideration
received by the corporation for the issue of any Additional Shares of Common
Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the corporation
excluding amounts paid or payable for accrued interest or accrued
dividend;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares of securities or other
assets of the corporation for consideration which covers both, be
the proportion of such consideration so received, computed as
provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the corporation for Additional
Shares of Common Stock deemed to have been issued pursuant to
Subparagraph 2(e)(ii)(1) relating to Options and Convertible
Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such
consideration) payable to the corporation upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the conversion or exchange of such Convertible
Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard
to any provision
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contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(3) Certain Dividends and Distributions. In the event
that the corporation at any time or from time to time after the
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock,
without payment of any consideration by such holder for the additional
shares of Common Stock, then and in each such event the number of
shares of Common Stock issuable in payment of such dividend or
distribution shall be deemed to be issued and outstanding as of the
time of such issuance or, in the event such a record date shall have
been fixed, as of the close of business on such record date. In each
such event the Conversion Price shall be reduced as of the time of such
issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, to a price (calculated to
the nearest cent) determined by multiplying the Conversion Price by a
fraction
(x) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed
to be issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(y) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding or deemed
to be issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or
if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to Subparagraph
2(e)(iv)(3) as of the time of actual payment of such dividend or
distribution.
(v) Adjustment for Stock Splits or Reverse Stock Splits. In
the event of a stock split or reverse stock split of the outstanding shares of
Common Stock, the Conversion Price shall, concurrently with the effectiveness
thereof, be proportionately increased in the case of a reverse stock split or
decreased in the case of a stock split.
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(vi) Adjustment for Reorganization or Reclassification of
Common Stock. In the case of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par values), each share of Series E Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock and other
securities and property receivable upon such reorganization or reclassification
that would have been received had the Series E Preferred Stock been converted
into Common Stock on the date of such event.
(f) No Impairment. The corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the corporation. The
corporation will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 2 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 E Preferred Stock against impairment.
(g) Certificate as to Adjustment. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Paragraph
2, the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series E Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Series E Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of Series E Preferred
Stock.
(h) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the corporation shall mail to each
holder of Series E Preferred Stock at least 10 days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
(i) Common Stock Reserved. The corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion
of the Series E
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Preferred Stock.
3. Optional Redemption.
The Series E Preferred Stock may be redeemed at the option of the
corporation in whole or in part at any time and from time to time at a price
of $10.00 per share, plus any declared and unpaid dividends ("Redemption
Price"), as follows:
(a) Notice of redemption ("Redemption Notice") shall be mailed by
first-class mail, postage prepaid, to each holder of record, at the holder's
address appearing on the books of the corporation. The Redemption Notice shall
be mailed no less than 15 days prior to the date fixed for redemption
("Optional Redemption Date") and shall state: the Optional Redemption Date; the
number of shares to be redeemed; the name and address of a bank where
certificates for the shares to be redeemed are to be surrendered against
payment of the Redemption Price. The corporation shall deposit the aggregate
Redemption Price at such bank on or before the Optional Redemption Date with
instructions to pay the Redemption Price against surrender of the certificates
representing the shares to be redeemed. Upon such deposit, as of the Optional
Redemption Date the shares described in the Redemption Notice shall cease to be
deemed outstanding and the holders thereof shall be entitled to no rights as
holders of the shares and shall be entitled solely to the receipt of the
Redemption Price against surrender to the bank of the certificate representing
the shares to be redeemed, if necessary.
(b) If on the Optional Redemption Date the Series E Preferred Stock is
held of record by more than one person, and if fewer than all outstanding
shares are to be redeemed, the shares to be redeemed shall be redeemed pro rata
from all holders in proportion to the number of shares held by each such holder
(with adjustments to avoid redemption of fractional shares). If fewer than all
of the shares held by any holder are redeemed, a new certificate shall be
issued to the holder representing the unredeemed shares.
4. Mandatory Redemption.
(a) The corporation shall redeem the following numbers of shares of
Series E Preferred Stock on the following dates ("Scheduled Redemption Dates"),
at the Redemption Price ("Scheduled Redemptions"):
Number of Shares Scheduled
To Be Redeemed Redemption Date
---------------- ---------------
29,350 November 1, 1993
65,083 November 1, 1994
134,833 November 1, 1995
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224,908 November 1, 1996
375,826 November 1, 1997
If the corporation redeems any shares of Series E Preferred Stock pursuant to
Paragraph 3, such redemption shall be deemed to be a prepayment applicable to
the next Scheduled Redemption to the extent that the shares redeemed do not
exceed the shares to be redeemed on the next Scheduled Redemption Date; to the
extent that such redemption exceeds the shares to be redeemed on the next
Scheduled Redemption Date, such redemption shall be deemed to be a Scheduled
Redemption made in reverse chronological order as set forth above. If the
corporation redeems any shares of Series E Preferred Stock pursuant to
Paragraph 4(d), such redemption shall be deemed to be a Scheduled Redemption
made in reverse chronological order as set forth above.
(b) On the first day of each month, commencing with November 1, 1993, the
corporation shall deposit into a separate bank account of the corporation an
amount equal to 1/24th of the aggregate Redemption Price payable on the next
Scheduled Redemption Date. On each Scheduled Redemption Date, commencing with
November 1, 1994, the corporation shall apply the funds in said account to the
Scheduled Redemption to be made on that date. If the corporation makes an
optional redemption pursuant to Paragraph 3: (i) the funds in said account at
the time of such optional redemption, not to exceed the aggregate Redemption
Price paid pursuant to such optional redemption and deemed to be a prepayment
applicable to the next Scheduled Redemption pursuant to Paragraph 4(a), shall
be transferred from said account into the corporation's general account; and
(ii) the corporation may discontinue making the monthly deposits described in
the first sentence of this Paragraph 4(b) until the first day of the month
following the next Scheduled Redemption Date if the funds in said account are
at least equal to the aggregate Redemption Price payable on the next Scheduled
Redemption Date.
(c) If on the Scheduled Redemption Date the outstanding shares of Series
E Preferred Stock are held of record by more than one person, the shares to be
redeemed on the Scheduled Redemption Date shall be redeemed pro rata from all
holders in proportion to the number of shares held by each holder (with
adjustments to avoid redemption of fractional shares). On each Scheduled
Redemption Date, each holder of shares to be redeemed on that date shall be
entitled to receive the Redemption Price upon surrender to the corporation of
the certificates representing the shares to be redeemed. If fewer than all
shares held by any holder are redeemed, a new certificate shall be issued to
the holder representing the unredeemed shares, if necessary.
(d) On a date ("Cash Flow Redemption Date") which is no later than 30
days after the date of the opinion of the
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78
corporation's independent certified public accountants with respect to the
corporation's audited financial statements for the preceding fiscal year,
commencing with the year ending September 30, 1993, the corporation shall
additionally redeem shares of Series E Preferred Stock at the Redemption Price
by applying a portion of its cash flow for the preceding year ("Cash Flow"), as
described below. If such redemption occurs later than 5 business days after the
date of such opinion, the payment of the Redemption Price shall be accompanied
by the payment of interest on the Redemption Price at the rate of 10.5% per
annum for the period from the sixth business day following the date of such
opinion through the date of the payment of the Redemption Price. Cash Flow in
respect of any fiscal year shall mean cash flow as defined in FASB Statements
95, 102 and 104 as the same may be amended or modified from time to time, less
any net increase in the deferred revenue account on the consolidated balance
sheet of the corporation as of the end of the fiscal year, or plus any net
decrease in the deferred revenue account on the balance sheet, each as
determined in accordance with generally accepted accounting principles and as
reported in the corporation's audited financial statements for that year.
(i ) If the Cash Flow is $1,000,000 or less, an amount
equal to 60% thereof shall be applied to the redemption of Series E Preferred
Stock;
(ii) If the Cash Flow is between $1,000,001 and
$2,000,000, an amount equal to 65% thereof shall be applied to the redemption
of Series E Preferred Stock;
(iii) If the Cash Flow is between $2,000,001 and
$3,000,000, 70% thereof shall be applied to the redemption of Series E
Preferred Stock;
(iv) If the Cash Flow is above $3,000,000, 75% thereof
shall be applied to the redemption of Series E Preferred Stock.
(e) If on any Cash Flow Redemption Date the Series E Preferred
Stock is held of record by more than one person and fewer than all outstanding
shares are to be redeemed, the shares to be redeemed shall be redeemed pro rata
from all holders in proportion to the number of shares held by each holder
(with adjustments to avoid redemption of fractional shares. On each Cash Flow
Redemption Date, each holder of shares to be redeemed on that date shall be
entitled to receive the Redemption Price upon surrender to the corporation of
the certificates representing the shares to be redeemed. If fewer than all
shares held by any holder are redeemed, a new certificate shall be issued to
the holder representing the unredeemed shares.
(f) Within 90 days after the occurrence of any of the events
described in Exhibit "A" attached hereto, the
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corporation shall redeem all of the Series E Preferred Stock at the Redemption
Price.
(g) If the corporation shall redeem any Series E Preferred Stock
pursuant to Paragraph 3 or Subparagraph 4(d), the corporation shall be entitled
to a credit against the aggregate Redemption Price payable on the next Scheduled
Redemption Date(s) in an amount equal to 0.025767% times the aggregate
Redemption Price paid by the corporation pursuant to the redemption under
Paragraph 3 or Subparagraph 4(d) times the number of days from the date of such
redemption through November 1, 1997. If on such next Scheduled Redemption Date,
the Series E Preferred Stock is held of record by more than one person and if
fewer than all outstanding shares are to be redeemed, such credit shall be
applied pro rata to the Redemption Prices payable to all holders.
5. Consent to Redemption.
Each holder of Series E Preferred Stock shall be deemed to have
consented, for purposes of Sections 502, 503 and 506 of the California General
Corporations Law, to extent that they may apply to the corporation, to
distributions made by the corporation in connection with the repurchase of
shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing
for the right of said repurchase between the corporation and such persons.
6. Voting Rights.
The holders of the Series E Preferred Stock shall be entitled to notice
of any shareholders' meeting and to vote upon any matter submitted to
shareholders for a vote, on the following basis:
(a) Each holder of Series E Preferred Stock shall have that number of
votes per share as is equal to the number of shares of Common Stock into which
each such share of Series E Preferred stock held by such holder is then
convertible; and
(b) Unless holders of a majority of the Series E Preferred Stock have
voted therefor or consented thereto in writing, the corporation shall not:
(i) Make any adverse change in the rights, preferences,
privileges of the Series E Preferred Stock;
(ii) Increase the authorized number of shares of Series E Preferred
Stock;
(iii) Issue any shares having a liquidation or dividend preference
which is on a parity with or senior to the liquidation or dividend preferences
of the Series E Preferred Stock, or having more than one vote per share;
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(iv) Issue any shares which are automatically convertible into
Common Stock under the circumstance described in Subparagraph 2(b) if the per
share purchase price and aggregate purchase price relating to such automatic
conversion is at or above the per share and aggregate prices specified in
Subparagraph 2(b)(i);
(v) Issue any shares which can be redeemed while the Series E
Preferred Stock is outstanding;
(vi) Consolidate with another corporation (other than a
wholly-owned subsidiary), merge into another corporation (other than a
wholly-owned subsidiary) or sell all or substantially of the assets of the
corporation (other than to an wholly-owned subsidiary), unless as a result of
such transaction the holders of the Series E Preferred Stock would be entitled
receive an amount at least equal to the Redemption Price per share or
securities having an aggregate fair market value at least equal to the
Redemption Price per share and either entitled to the benefits of Rule 145(d) or
issued pursuant to a hearing before the California Commissioner of Corporations
of the type referred to in Section 3(a)(10) of the Securities Act of 1933;
(vii) Redeem, purchase or otherwise acquire any shares of any
series of Preferred Stock (other than the Series E Preferred Stock) or any
Common Stock (other than purchases of Common Stock from former employees for
consideration not to exceed the fair market value of such shares).
(c) Except as provided above, the holders of the Series E Preferred
Stock shall not be entitled to vote separately on any matters as a class.
7. Dividend Rights.
The holders of Series E Preferred Stock shall be entitled to receive in
any fiscal year, when and if declared by the Board of Directors, out of assets
at any time legally available therefor, a dividend of $0.95 on each outstanding
share, payable in preference and priority to any dividend on any shares of any
other series of Preferred Stock or any Common Stock.
8. Residual Rights.
All rights accruing to the outstanding shares of the corporation not
expressly provided for to the contrary in this or any other Certificate of
Designations of any other series of Preferred stock shall be vested in the
Common Stock.
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IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Ralph Korpman, its President, and attested by Janice
E. Ticich, its Assistant Secretary, this 22 day of July, 1993.
HEALTH DATA SCIENCES CORPORATION
BY: /s/Ralph Korpman
----------------------------------------
Ralph Korpman,
President
ATTEST:
By: /s/ Janice E. Ticich
-------------------------------------
Janice E. Ticich, Assistant Secretary
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
RALPH KORPMAN, being first duly sworn, deposes and says that:
He is the President of the Delaware corporation herein mentioned; the
matters set forth herein are true to his own knowledge; and the signature
purporting to be the signature of said Ralph Korpman is his genuine signature.
/s/Ralph Korpman
-------------------------------------------
RALPH KORPMAN
Subscribed and sworn to before me on July 22, 1993.
/s/Susan Saly
-------------------------------------------
NOTARY PUBLIC
State of California
[SEAL]
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STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
JANICE E. TICICH, being first duly sworn, deposes and says that:
She is the Assistant Secretary of the Delaware corporation herein
mentioned; the matters set forth herein are true to her own knowledge; and the
signature purporting to be the signature of said Janice E. Ticich is her
genuine signature.
/s/Janice E. Ticich
-------------------------------------------
JANICE E. TICICH
Subscribed and sworn to before me on July 22, 1993.
/s/Susan Saly
-------------------------------------------
NOTARY PUBLIC
State of California
[SEAL]
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EXHIBIT "A"
-----------
1. Breach by the corporation of any representation or warranty made by
the corporation in a certain agreement, dated August 5, 1993, between Berkeley
Atlantic Income Limited ("Berkeley") and the corporation (the "Exchange
Agreement") which is not cured for a period of 30 days after the corporation's
receipt of a written notice of such breach by Berkeley to the corporation;
2. Breach by the corporation of any affirmative convenant (including,
without limitation, any financial convenant) of the Exchange Agreement which is
not cured for a period of 30 days after the corporation's receipt of written
notice of such a breach by Berkeley to the corporation;
3. The acceleration of $500,000 or more in indebtedness of the
corporation for borrowed money and the non-payment thereof, for a period of 30
days after the date of such acceleration, or judgment against the corporation
in excess of $500,000 (other than a judgment which the corporation is appealing
and has bonded, if necessary, or a judgment which the corporation has paid in
full or is paying in accordance with its terms; provided further, however, that
as to civil action No. SACV 92-338-GLT pending in the United States District
Court for the Central District of California (the Corporation vs. Robert
Servian), a judgment against the Corporation shall be deemed to be in excess of
$500,000 only if the judgment is for past monies due in excess of $500,000, and
shall not be deemed to be in excess of $500,000, if it is a judgment pursuant to
which the Corporation may be liable for amounts which may aggregate in excess of
$500,000 depending on its future sales or collections);
4. Voluntary bankruptcy, involuntary bankruptcy (which proceedings are
not terminated within 45 days of filing), assignment for the benefit of
creditors, or the appointing of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the corporation or of all
or substantially all of its property, or ordering the winding up or liquidation
of its affairs, or the admission by it in writing of the failure generally by it
to pay its debts as they become due and its willingness to be adjudicated
bankrupt;
5. A final judgment of a court of competent jurisdiction holding
invalid any of the material rights, preferences or privileges of the Series E
Preferred Stock; or
6. Failure by the corporation to make any other payment otherwise due
to Berkeley pursuant to any written agreement between Berkeley and the
corporation (other than the Exchange Agreement) for a period of 10 days after
the corporation's receipt of written notice of such failure by Berkeley to the
corporation.
84
CERTIFICATE OF ELIMINATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of said corporation, and pursuant to
the provisions of Section 151 of the Delaware General Corporation Law, said
Board of Directors, acting pursuant to a unanimous written consent, adopted a
resolution providing for the elimination of 9,411 shares of the Serial
Preferred Shares - Series A stock of said corporation, which resolution is as
follows:
WHEREAS, this corporation on August 26, 1983, filed with the Office
of the Delaware Secretary of State a Certificate of Designations of
Preferences and Rights of Serial Preferred Shares of this corporation (the
"Certificate of Designations"), relating to Nine Thousand Four Hundred
Eleven (9,411) shares of this corporation's Preferred Stock designated
"Serial Preferred Shares, Series A" (the "Series A Stock"); and
WHEREAS, no shares of the Series A Stock remain outstanding and none
will be issued subject to the Certificate of Designations;
RESOLVED, that there be eliminated from the Certificate of
Incorporation of this corporation all matters set forth in the Certificate
of Designations relating to the Series A Stock and that the previously
authorized shares of Series A Stock be restored to the status of
authorized, unissued shares of this corporation's Serial Preferred Stock;
85
RESOLVED FURTHER, that the officers of this corporation are hereby
authorized and directed to: (i) execute and file with the office of the
Delaware Secretary of State a Certificate of Elimination, which will set
forth this resolution certifying that the elimination of the Series A
Stock has been authorized and directed by the Board of Directors; and (ii)
take such other actions as may be necessary or advisable to give effect to
the foregoing resolutions.
IN WITNESS WHEREOF, said HEALTH DATA SCIENCES CORPORATION has caused this
Certificate to be signed by Ralph A. Korpman, its President and attested by
Janice E. Ticich, its Assistant Secretary this 22 day of July, 1993.
HEALTH DATA SCIENCES CORPORATION
By: /s/Ralph A. Korpman
----------------------------------------
RALPH A. KORPMAN, President
ATTEST:
By: /s/Janice E. Ticich
-------------------------------------
JANICE E. TICICH, Assistant Secretary
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CERTIFICATE OF ELIMINATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of said corporation, and pursuant to
the provisions of Section 151 of the Delaware General Corporation Law, said
Board of Directors, acting pursuant to a unanimous written consent, adopted a
resolution providing for the elimination of 583,334 shares of the Serial
Preferred Shares - Series D stock of said corporation, which resolution is as
follows:
WHEREAS, this corporation on September 30, 1987, filed with the
Office of the Delaware Secretary of State a Certificate of Designations of
Preferences and Rights of Serial Preferred Shares of this corporation (the
"Certificate of Designations"), relating to One Million Two Hundred Fifty
Thousand (1,250,000) shares of this corporation's Preferred Stock
designated "Serial Preferred Stock, Series D" (the "Series D Stock"); and
WHEREAS, this corporation on December 9, 1987, filed with the office
of the Delaware Secretary of State an Amendment of Certificate of
Designations of Preferences and Rights of Series Preferred Shares of this
corporation, whereby the number of authorized shares of Series D Stock was
reduced to Five Hundred Eighty-Three Thousand Three Hundred Thirty-Four
(583,334) shares; and
87
WHEREAS, no shares of the Series D Stock remain outstanding and
none will be issued subject to the Certificate of Designations, as
amended;
RESOLVED, that there be eliminated from the Certificate of
Incorporation of this corporation all matters set forth in the Certificate
of Designations, as amended, relating to the Series D Stock and that the
previously authorized shares of Series D Stock be restored to the status
of authorized, unissued shares of this corporation's Serial Preferred
Stock;
RESOLVED FURTHER, that the officers of this corporation are hereby
authorized and directed to: (i) execute and file with the office of the
Delaware Secretary of State a Certificate of Elimination, which will set
forth this resolution certifying that the elimination of the Series D
Stock has been authorized and directed by the Board of Directors; and (ii)
take such other actions as may be necessary or advisable to give effect
to the foregoing resolutions.
IN WITNESS WHEREOF, said HEALTH DATA SCIENCES CORPORATION has caused
this Certificate to be signed by Ralph A. Korpman, its President and attested
by Janice E. Ticich, its Assistant Secretary this 22 day of July, 1993.
HEALTH DATA SCIENCES CORPORATION
By: /s/Ralph A. Korpman
----------------------------------------
RALPH A. KORPMAN, President
ATTEST:
By: /s/Janice E. Ticich
-------------------------------------
JANICE E. TICICH, Assistant Secretary
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88
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS OF PREFERENCES
AND RIGHTS OF SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State Delaware (the
"Corporation"),
DOES HEREBY CERTIFY:
FIRST: That, by unanimous written consent of the Board of Directors of
the Corporation, a resolution was duly adopted setting forth a proposed
amendment of the Certificate of Designations of Preferences and Rights of
Serial Preferred Shares of the Corporation relating to the Corporation's Series
B Preferred Stock, which Certificate of Designations was filed with Office of
the Delaware Secretary of State on April 12, 1984. In its unanimous written
consent, the Board of Directors declared the proposed amendment to be advisable
and called for the stockholders of the Corporation to consider the proposed
amendment. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that clause (B) of subparagraph 2(d)(i)(4) of the
Certificate of Designations of Preferences and Rights of the Corporation's
Series B Preferred Stock be amended to read in its entirety as follows:
(B) to officers, directors or employees of, or
consultants to, the corporation pursuant to an employment agreement,
a stock purchase or option plan or other employee stock incentive
program (collectively, the "Plans") approved by the Board of
Directors and the holders of (i) a majority of the shares of the
corporation's capital stock present in person or by proxy at a
meeting of the corporation's stockholders and entitled to vote
thereon, or (ii) a majority of the corporation's capital stock
entitled to act thereon executing written consents to action in lieu
meeting; or
SECOND: That, thereafter, pursuant to a resolution of the Board of
Directors of the Corporation, an annual meeting of the stockholders of the
Corporation was duly called and held, upon notice in accordance with Section
222 of the General Corporation law of the State
89
of Delaware, at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said HEALTH DATA SCIENCES CORPORATION has caused
this Certificate to be signed by Peter Gladkin, its President, and attested by
Janice E. Ticich, its Secretary, this 10th day of February, 1995.
BY: /s/ Peter Gladkin
------------------------------------
Peter Gladkin, President
ATTEST: /s/ Janice E. Ticich
----------------------------
Janice E. Ticich, Secretary
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90
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF DESIGNATIONS OF PREFERENCES
AND RIGHTS OF SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That, by unanimous written consent of the Board of Directors of
the Corporation, a resolution was duly adopted setting forth a proposed
amendment of the Certificate of Designations of Preferences and Rights of Serial
Preferred Shares of the Corporation relating to the Corporation's Series C
Preferred Stock, which Certificate of Designations was filed with Office of the
Delaware Secretary of State on August 28, 1985. In its unanimous written
consent, the Board of Directors declared said amendment to be advisable and
called for the stockholders of the Corporation to consider the proposed
amendment. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that clause (B) of subparagraph 2(d)(i)(4)
of the Certificate of Designations of Preferences and Rights
of the Corporation's Series C Preferred Stock be amended to
read in its entirety as follows:
(B) to officers, directors or employees of,
or consultants to, the corporation pursuant to an
employment agreement, a stock purchase or option
plan or other employee stock incentive program
(collectively, the "Plans") approved by the Board of
Directors and the holders of (i) a majority of the
shares of the corporation's capital stock present in
person or by proxy at a meeting of the corporation's
stockholders and entitled to vote thereon, or (ii) a
majority of the corporation's capital stock entitled
to act thereon executing written consents to action
in lieu meeting; or
SECOND: That, thereafter, pursuant to a resolution of the Board of
Directors of the Corporation, an annual meeting of the stockholders of the
Corporation was duly called and held, upon notice in accordance with Section
222 of the General Corporation law of the State
91
of Delaware, at which meeting the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That the amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said HEALTH DATA SCIENCES CORPORATION has caused
this Certificate to be signed by Peter Gladkin, its President, and attested by
Janice E. Ticich, its Secretary, this 10th day of February, 1995.
BY: /s/ Peter Gladkin
------------------------------------
Peter Gladkin, President
ATTEST: /s/ Janice E. Ticich
----------------------------
Janice E. Ticich, Secretary
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92
CERTIFICATE OF DESIGNATIONS OF
PREFERENCES AND RIGHTS OF
SERIAL PREFERRED SHARES OF
HEALTH DATA SCIENCES CORPORATION
HEALTH DATA SCIENCES CORPORATION, a corporation organized and existing
under the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation (as amended) of said corporation, and pursuant
to the provisions of Section 151 of Title 8 of the Delaware Code of 1953, said
Board of Directors, by a unanimous written consent dated May 24, 1995, adopted
a resolution providing for the designations, preferences and relative,
participating, optional or other rights, and the qualifications, limitations or
restrictions thereof, of the Series F Preferred Stock, which resolution is as
follows:
WHEREAS, the Certificate of Incorporation of this corporation provides
for a class of shares known as Preferred Stock, issuable from time to time in
one or more series; and
WHEREAS, the Board of Directors of this corporation is authorized,
within the limitations and restrictions stated in the Certificate of
Incorporation, to determine or alter the rights, preferences, privileges, and
restrictions granted to or imposed upon any wholly unissued series of the
Preferred Stock, to fix the number of shares constituting any such series, and
to determine the designation thereof; and
WHEREAS, this corporation has previously issued shares of Series A,
Series B, Series C, Series D and Series E Preferred Stock, respectively, of
which shares of only Series B, Series C and Series E Preferred Stock are
currently outstanding, and the
93
Board of Directors of this corporation desires, pursuant to its authority as
aforesaid, to fix the terms of an additional series of said Preferred Stock and
the number of shares constituting and the designation of such series;
RESOLVED, that the Board of Directors hereby fixes and determines the
designation of, the number of shares constituting, and the rights, preferences,
privileges, and restrictions relating to, said additional series of Preferred
Stock as follows:
A. This additional series of Preferred Stock shall be designated "Serial
Preferred Stock, Series F," (the "Series F Preferred Stock") and the number of
shares constituting such Series F Preferred Stock shall be One Million Eight
Hundred Eighteen Thousand One Hundred and Eighty One (1,818,181) shares, par
value $0.10 per share.
B. The rights, preferences, privileges and restrictions of, and other
matters relating to, the Series F Preferred Stock are as follows:
1. Certain Definitions. Unless the context otherwise requires,
the terms defined in this paragraph 1 shall have, for all purposes of this
resolution, the meanings herein specified:
"Common Stock" shall mean all shares now or hereafter authorized of any class
of common stock of the corporation and any other stock of the corporation,
howsoever designated, authorized after the Issue Date, which has the right
(subject always to the prior rights of any class or series of preferred stock)
to participate in the distribution of the assets and earnings of the
corporation without limit as to per share amount.
"Conversion Date" shall have the meaning set forth in subparagraph 3(d)(3).
"Conversion Price" shall have the meaning set forth in subparagraph 3(c).
"Conversion Stock" shall mean shares of the corporation's Common Stock, par
value $0.10 per share; provided that if there is a change such that the
securities issuable upon conversion of the Series F Preferred Stock are issued
by an entity other than the corporation or there is a change in the class of
securities so issuable, then the term "Conversion Stock" shall mean the
security issuable upon conversion of the Series F Preferred Stock if such
security is issuable in shares, or shall mean the units in which such security
is issuable, if such security is not issuable in shares.
2
94
"Convertible Securities" shall have the meaning set forth in subparagraph
3(e)(2)(A).
"Current Market Price" shall have the meaning set forth in subparagraph 3(e)(7).
"Issue Date" shall mean the date that shares of Series F Preferred Stock are
first issued by the corporation.
"Junior Stock" shall mean, for purposes of paragraphs 6 and 7 below, the Common
stock and any other class or series of stock of the corporation issued after
the Issue Date not entitled to receive any dividends unless all dividends
required to have been paid or declared and set apart for payment on the Series
F Preferred Stock shall have been so paid or declared and set apart for payment
and, shall mean, for purposes of paragraphs 2 and 7 below, any class or series
of stock of the corporation issued after the Issue Date not entitled to receive
any assets upon the liquidation, dissolution, or winding up of the affairs of
the corporation until the Series F Preferred Stock shall have received the
entire amount to which such stock is entitled upon such liquidation,
dissolution or winding up.
"Net Assets" shall have the meaning set forth in paragraph 2.
"Option" shall have the meaning set forth in subparagraph 3(e)(2)(A).
"Organic Change" shall have the meaning set forth in subparagraph 3(e)(5).
"Parity Stock" shall mean, for purposes of paragraphs 6 and 7 below, any other
class or series of stock of the corporation entitled to receive payment of
dividends on a parity with the Series F Preferred Stock and, shall mean, for
purposes of paragraphs 2 and 7 below, any other class or series of stock of the
corporation entitled to receive assets upon the liquidation, dissolution or
winding up of the affairs of the corporation on a parity with the Series F
Preferred Stock and shall include the corporation's Series B Preferred Stock and
Series C Preferred Stock.
"Preferred Stock" shall mean the Series F Preferred Stock and the Parity Stock.
"Senior Stock" shall mean any class or series of stock of the corporation
issued after the Issue Date entitled to receive payment of dividends and assets
upon the liquidation, winding up or dissolution of the corporation in
preference and priority to the Series F Preferred Stock and shall include the
corporation's Series E Preferred Stock.
3
95
"Series F Preferred Stock" shall have the meaning set forth in resolution A,
above.
2. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the corporation, the assets of the corporation
available for distribution to stockholders after the payment or provision for
the payment of all claims against the corporation has been made in accordance
with applicable law ("Net Assets"), shall be distributed as follows: the holders
of the Senior Stock shall first be entitled to receive an amount equal to their
liquidation preference, plus any declared and unpaid dividends; thereafter the
holders of the Series F Preferred Stock shall be entitled to receive $16.50 per
share, plus any declared or accrued and unpaid dividends and the holders of the
Parity Stock shall concurrently be entitled to receive their respective
liquidation preferences, plus any declared and unpaid dividends; and finally,
the holders of the Common Stock and the Senior Stock shall then be entitled to
receive all remaining Net Assets ratably in accordance with their liquidation
preferences.
If the assets or surplus funds to be distributed to the holders of the
Series F Preferred Stock are insufficient to permit the payment to such holders
and to the holders of any Parity Stock of their full preferential amount after
paying the holders of the Senior Stock, the assets and surplus funds legally
available for distribution shall be distributed ratably among the holders of
the Series F Preferred Stock and the holders of any other such Parity Stock in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
The corporation shall mail written notice of such liquidation,
dissolution or winding up, not less than 30 days prior to the payment date
stated therein, to each record holder of Series F Preferred Stock.
3. Conversion. The holders of the Series F Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
a. Right to Convert. Each share of Series F Preferred
Stock shall be convertible, without the payment of any additional consideration
by the holder thereof and at the option of the holder thereof, at any time and
from time to time after the Issue Date, at the office of the corporation or any
transfer agent for the Series F Preferred Stock, at the Conversion Price per
share determined pursuant to this paragraph 3.
4
96
b. Automatic Conversion. Each share of Series F Preferred Stock shall
automatically be converted, without any further act of the corporation or its
stockholders, into fully paid and nonassessable shares of Conversion Stock at
the Conversion Price on the closing date of a sale of any of the Common Stock in
a firm commitment underwritten public offering pursuant to a registration
statement on Form S-1 (or any successor or reasonably equivalent forms) under
the Securities Act of 1933, as amended (other than the registration of a stock
option, purchase, thrift, reinvestment, compensation or similar plan or of
securities issued or issuable pursuant to such plan, or of securities issued or
issuable in connection with a merger of the corporation or the acquisition of
securities or other assets by the corporation) (an "IPO"), at a per share offer
price which is at least 150% of the Conversion Price then in effect and which
has an aggregate price of not less than $7,000,000.
c. Conversion Price. The shares of Series F Preferred Stock shall be
converted into the number of shares of Conversion Stock determined by dividing
(i) the sum of $16.50 per Share, plus any accrued and unpaid dividends on such
shares of Series F Preferred Stock, by (ii) the Conversion Price in effect on
the Conversion Date. The Conversion Price shall initially be $16.50, and shall
be subject to adjustment, as hereinafter provided. "Conversion Price" shall
mean the Conversion Price from time to time in effect after giving effect to all
prior adjustments.
d. Mechanics of Conversion.
(1) No Fractional Shares. No fractional shares of Conversion Stock
shall be issued upon conversion of the Series F Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the Conversion
Price then in effect.
(2) Notice of Conversion. Upon the occurrence of any of the events
specified in subparagraph 3(b), the outstanding shares of Series F Preferred
Stock shall be converted automatically upon surrender of the certificates
representing such shares to the corporation or its transfer agent Upon a
conversion, the Series F Preferred Stock holder shall surrender the certificate
or certificates therefor, duly endorsed, at the office of the corporation or of
any transfer agent for the Series F Preferred Stock and shall give written
notice to the corporation at such office that he elects to convert the same
and shall state therein his name or the name or names of his nominees in which
he wishes the certificate or certificates for shares of Common Stock to be
issued (except that no such written notice of intent to convert shall be
necessary in the event of an automatic conversion pursuant to subparagraph
3(b)).
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(3) Conversion Date. Conversion shall be deemed to have been effected on
the date when delivery of notice of an election to convert and certificates for
shares is made or on the date of the occurrence of the event specified in
subparagraph 3(b), as the case may be, and such date is referred to herein as
the "Conversion Date."
(4) Certificates; Payment. As soon as possible after a conversion has
been effected (but in any event within five business days, the corporation
shall deliver to the converting holder):
(A) a certificate or certificates representing the number of
shares of Conversion Stock issuable by reason of such conversion in such name
or names and such denomination or denominations as the converting holder has
specified;
(B) payment in an amount equal to all accrued dividends with
respect to each share converted, which have not been paid prior thereto;
(C) a certificate representing any shares of Series F Preferred
Stock which were represented by the certificate or certificates delivered to
the corporation in connection with such conversion but which were not converted.
(5) Dividends. If the corporation is not permitted under applicable
law to pay any portion of the accrued dividends on the Series F Preferred Stock
being converted, the corporation shall pay such dividends to the converting
holder as soon thereafter as funds of the corporation are legally available for
such payment. At the request of any such converting holder, the corporation
shall provide such holder with written evidence of its obligation to such
holder.
e. Adjustment to Conversion Price. In order to prevent dilution of the
conversion rights granted under this paragraph 3, the Conversion Price shall be
subject to adjustment from time to time pursuant to this subparagraph 3(e).
(1) Antidilution. If and whenever on or after the Issue Date, the
corporation issues or sells, or in accordance with subparagraph 3(c)(2) is
deemed to have issued or sold, any share of Common Stock for a consideration
per share less than the Conversion Price in effect immediately prior to such
time, then forthwith upon such issue or sale the Conversion Price shall be
reduced to the lowest net price per share at which any such share of Common
Stock has been issued or sold or is deemed to have been issued or sold.
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(2) Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under subparagraph 3(e)(1), the
following shall be applicable:
(A) Issuance of Rights or Options. If the corporation in any
manner grants any right or option to subscribe for or to purchase Common Stock
or any stock or other securities convertible into or exchangeable for Common
Stock (such rights or options being herein called "Options" and such
convertible or exchangeable stock or securities being herein called
"Convertible Securities") (other than (x) Options granted to employees and
directors of the corporation issued pursuant to the corporation's 1995 Stock
Option Plan for Key Employees or other than up to 500,000 additional Options
issued to employees and directors pursuant to future stock option plans which
have been approved by the non-employee stockholders holding a majority of the
corporation's outstanding capital stock so long as the exercise price of such
Options is equal to the fair market value of the Common Stock at the time of
issuance of the Option, provided that, in connection with such 500,000
additional Options only, Options issued to Dr. Ralph Korpman shall qualify for
the exception to Conversion Price adjustment contained herein only to the
extent that such Options have been approved by a majority of the outside
directors of the corporation's Board of Directors and (y) shares of Common
Stock issued on conversion of the Series B, C, E or F Preferred Stock) and the
lowest price per share for which any one share of Common Stock is issuable upon
the exercise of any such Convertible Security is less than the Conversion Price
in effect immediately prior to the time of the granting of such Option, then
such share of Common Stock shall be deemed to have been issued and sold by the
corporation at the time of the granting of such Options for such price per
share. For purposes of this subparagraph, the "lowest price per share for
which any one share of Common Stock is issuable" shall be equal to the sum of
the lowest amounts of consideration (if any) received or receivable by the
corporation with respect to any one share of Common Stock upon the granting of
the Option, upon exercise of the Option and upon conversion or exchange of the
Convertible Security. No further adjustment of the Conversion Price shall be
made upon the actual issue of such Common Stock or of such Convertible
Security upon the exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Security.
(B) Issuance of Convertible Securities. If the corporation in
any manner issues of sells any Convertible Security and the lowest price per
share for which any one share of Common Stock is issuable upon conversion or
exchange thereof is less than the Conversion Price in effect immediately prior
to the time of such issue or sale, then such share of Common Stock shall be
deemed to have been issued and sold by the corporation at the time of the
issuance or sale of such Convertible
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Securities for such price per share. For the purposes of this paragraph, the
"lowest price per share for which any one share of Common Stock is issuable"
shall be equal to the sum of the lowest amounts of consideration (if any)
received or receivable by the Corporation with respect to any one share of
Common Stock upon the issuance of the Convertible security and upon the
conversion or exchange of such Convertible Security. No further adjustment of
the Conversion Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of any Convertible Security, and if any such issue
or sale of such Convertible Security is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this subparagraph 3(e), no further adjustment of the
conversion Price shall be made by reason of such issue or sale.
(C) Change in Option Price or Conversion Rate. If the
purchase price provided for in any Option, the additional consideration (if any)
payable upon the issue, conversion or exchange of any Convertible Security, or
the rate at which any Convertible Security is convertible into or exchangeable
for Common Stock change at any time, the Conversion Price in effect at the time
of such change shall be readjusted to the Conversion Price which would have been
in effect at such time had such Option or Convertible Security originally
provided for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(D) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right
to convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be adjusted
to the Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to the extent
outstanding immediately prior to such expiration or termination, never been
issued.
(E) Calculation of Consideration Received. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have been
issued or sold for chase, the consideration received therefor shall be deemed to
be the net amount received by the corporation therefor. In case any Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of the consideration other than cash received by the
corporation shall be the fair value of such consideration, except where such
consideration consists of securities, in which case, the amount of consideration
received by the corporation shall be the current market price thereof as of the
date of receipt (as determined with reference to paragraph 3(e)(7)). If any
Common Stock,
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Option or Convertible Security is issued to the owners of the non-surviving
entity in connection with any merger in which the corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to be the
fair value of such portion of the net assets and business of the non-surviving
entity as is attributable to such Common Stock, Options or Convertible
Securities, as the case may be. The fair value of any consideration other than
cash and securities shall be determined jointly by the corporation and the
holders of at least eighty-five (85%) of the outstanding Series F Preferred
Stock. If such parties are unable to reach agreement within a reasonable
period of time, the fair value of such consideration shall be determined by an
independent appraiser experienced in valuing such type of consideration jointly
selected by the corporation and the holders of at least eighty-five percent
(85%) of the outstanding Series F Preferred Stock. The determination of such
appraiser shall be final and binding upon the parties, and the fees and
expenses of such appraiser shall be paid by the corporation.
(F) Treasury Shares. The number of shares of Common Stock
outstanding at any given time does not include shares owned or held by or for
the account of the corporation or any of its subsidiaries, and the disposition
of any shares so owned or held shall be considered an issue or sale of Common
Stock.
(G) Record Date. If the corporation takes a record of the
holders of Common Stock for the purpose of entitling them (a) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities, or (b) 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 upon the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(3) Additional Adjustments. If the conversion Price is adjusted,
then all reference herein to $16.50 shall, concurrently with the effective date
of such event, be proportionately adjusted (to the nearest cent) to reflect the
effect of such event.
(4) Subdivision or Combination of Common Stock. If the corporation
at any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the corporation at
any time combines (by reverse stock split
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or otherwise) one or more classes of its outstanding shares of Common Stock into
smaller number of shares, the Conversion Price in effect immediately prior to
such combination shall be proportionately increased.
(5) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the corporation's assets to another person or
other transaction which is affected in such a manner that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "Organic Change." Prior to the consummation of any
Organic Change, the corporation shall make appropriate provisions (in form and
substance reasonably satisfactory to the holders of at least eighty-five percent
(85%) of the Series F preferred Stock then outstanding) to insure that each of
the holders of Series F Preferred Stock shall thereafter have the right to
acquire and receive, in lieu of the shares of Conversion Stock immediately
theretofore acquirable and receivable upon the conversion of such holder's
Series F Preferred Stock, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such holder
had converted its Series F preferred Stock immediately prior to such Organic
Change. In the case of a recapitalization, reclassification, consolidation or
merger,the corporation shall also make appropriate provisions (in form and
substance reasonably satisfactory to the holders, of at least eighty-five
percent (85%) of the Series F Preferred Stock then outstanding) to insure that
the provisions of this paragraph (e) shall thereafter be applicable to the
Series F Preferred Stock (including, in the case of any such reclassification,
consolidation or merger in which the successor entity or purchasing entity is
other than the corporation, an immediate adjustment of the Conversion Price to
the value for the Common Stock reflected by the terms of such reclassification,
consolidation or merger, and a corresponding immediate adjustment in the number
of shares of Conversion Stock acquirable and receivable upon conversion of
Series F Preferred Stock, if the value so reflected is less than the Conversion
Price in effect immediately prior to such reclassification, consolidation or
merger). The corporation shall not effect any consolidation, merger or sale,
unless prior to the consummation thereof, the successor corporation (if other
than the corporation) resulting from consolidation or merger or the corporation
purchasing such assets assumes by written instrument (in form reasonably
satisfactory to the holders of at least eighty-five percent (85%) of the Series
F preferred Stock then outstanding), the obligation to deliver to each such
holder such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such holder may be entitled to acquire.
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(6) Certain Events. If any event occurs of the type
contemplated by the provisions of this subparagraph 3(e) but not expressly
provided for by such provisions (including, without limitation, the granting of
stock appreciation rights, phantom stock rights or other rights with equity
features), then the corporation's Board of Directors shall make an appropriate
adjustment in the Conversion Price so as to protect the rights of the holders of
the Series F Preferred Stock; provided that no such adjustment shall increase
the Conversion Price as otherwise determined pursuant to this paragraph 3 or
decrease the number of shares of Common Stock issuable upon conversion of each
share of Series F Preferred Stock, except with respect to the expiration of
unexercisable Options or the termination of rights to convert or exchange
Convertible Securities as set forth in paragraph 3(e)(2)(E).
(7) Current Market Price. The Current Market Price at any date
shall mean, in the event the Common Stock is publicly traded, the average of
the daily closing prices per share of Common Stock for 30 consecutive trading
days ending no more than 15 business days before such date (as adjusted for any
stock dividend, split, combination or reclassification that took effect during
such 30 business day period). The closing price for each day shall be the last
reported sale price regular way or, in case no such reported sale takes place
on such day, the average of the last closing bid and asked prices regular way,
in either case on the principal national securities exchange on which the
Common Stock is listed or admitted to trading, or if not listed or admitted to
trading on any national securities exchange, the closing sale price for such
day reported by NASDAQ, if the Common Stock is traded over-the-counter and
quoted in the National Market System, or if the Common Stock is so traded but
not so quoted, the average of the closing reported bid and asked prices of the
Common Stock as reported by NASDAQ or any comparable system, of if the Common
Stock is not listed on NASDAQ or any comparable system, the average of the
closing bid and asked prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by the
corporation for that purpose. If the Common Stock is not traded in such manner
that the quotations referred to above are available for the period required
hereunder, Current Market Price per share of Common Stock shall be deemed to be
the fair value as determined by the Board of Directors, irrespective of any
accounting treatment.
(8) Notices.
(A) Promptly following any adjustment of the Conversion
Price, the corporation shall give written notice thereof to all holders of
Series F Preferred Stock, setting forth in reasonable detail and certifying the
calculation of such adjustment.
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(B) The corporation shall give written notice to all holders of
Series F Preferred Stock at least 10 days prior to the date on which the
corporation closes its books or takes a record (a) with respect to any pro rata
subscription offer to holders of Common Stock or (b) for determining rights to
vote with respect to any Organic Change
(C) The corporation shall also give written notice to the
holders of Series F Preferred Stock at least 10 days prior to the date on which
any Organic Change shall take place.
f. Costs. The corporation shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of shares
of Common Stock upon conversion of Series F preferred Stock; provided that the
corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
F Preferred Stock in respect of which such shares are being issued.
g. No Impairment. The corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation. The
corporation will at all times in good faith assist in the carrying out of all
the provisions of this paragraph 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holder of the Series F Preferred Stock against impairment.
h. Certificate as to Adjustment. Upon the occurrence of each adjustment
or readjustment of the Conversion Price pursuant to this paragraph 3, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series F Preferred Stock and shall file, at the office of any transfer agent for
the Series F Preferred Stock and at the principal office of the corporation, a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The corporation
shall, upon the written request at any time of any holder of Series F Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the conversion Price
at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time
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would be received upon the conversion of Series F preferred Stock.
i. Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the corporation shall mail to each
holder of Series F Preferred Stock at least ten (10) days prior to the date
specified for the taking of a record, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.
j. Common Stock Reserved. The corporation shall reserve and keep
available out of its authorized but unissued Common Stock such a number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of the Series F Preferred Stock.
k. Valid Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Series F Preferred Stock will upon
issuance by the corporation be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof, and the corporation shall take no action which will cause a
contrary result (including without limitation, any action which would cause the
Conversion Price to be less than the par value, if any, of the Common Stock.)
4. Consent to Redemption by Series F Preferred Stockholders. Each
holder of Series F preferred Stock shall be deemed to have consented, for
purposes of Section 502, 503 and 506 of the California General Corporations Law,
to the extent that they may apply to the corporation, to distributions made by
the corporation in connection with the repurchase of shares of Common Stock
issued to or held by current or former directors, employees or consultants
pursuant to agreements providing for the right of said repurchase between the
corporation and such persons if and only if such shares of Common Stock are
repurchased at the same price purchased by or issued to such directors,
employees or consultants (or, in the event such director, employee or consultant
has entered into a buyout agreement with the corporation requiring the
corporation, pursuant to paragraphs 3 and 4 of such agreement, to purchase
shares of Common Stock at fair market value, than the corporation may purchase
such shares at a purchase price not to exceed the fair market value of such
shares at the time of repurchase).
5. Voting Rights. Except as otherwise required by law, the holders of
Series F Preferred Stock and the holders of the Common Stock shall be entitled
to notice of any shareholders'
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meeting and to vote upon any matter submitted to shareholders for a vote, on the
following basis:
a. Holders of Common Stock shall have one vote per share;
b. Holders of Series F Preferred Stock shall have that number of
votes per share as is equal to the number of shares of Common Stock into which
each such share of Series F Preferred Stock held by such holder is convertible;
c. Except as otherwise required by law, the holders of the series F
Preferred Stock shall be entitled to vote on all matters submitted to the
stockholders for a vote together with the holders of the Common Stock voting
together as a single class.
6. Dividend Rights. (a) The holders of outstanding Series F
Preferred Stock shall be entitled to receive in any fiscal year, when and if
declared by the Board of Directors, out of any assets at the time legally
available therefore, dividends in each at the rate of One Dollar and Fifteen
Cents ($1.15) per share of Series F Preferred Stock, accruing on a daily basis,
per annum, from and including the Issue Date, payable in preference and priority
to any dividend on any shares of any Junior Stock and payable on parity with any
dividend on any shares of Parity Stock. Notwithstanding the foregoing,
dividends on the Series F Preferred Stock shall not accrue or be cumulative
unless the corporation shall declare a cash dividend in respect of any class of
capital stock, in which case, the dividends on the Series F Preferred Stock
shall be cumulative and shall accrue from the Issue Date until paid in full
whether or not the corporation shall have earnings, whether or not there shall
be funds legally available for the payment of such dividends and whether or not
such dividends are paid. In the event that such dividends become cumulative and
accrue, they shall be payable in arrears, when as declared by the Board of
Directors, on March 31, June 30, September 30 and December 31 of the year in
which such dividends become cumulative and accrue and they shall bear interest
at a rate of ten percent (10%) per annum from the respective payment dates for
dividends set forth in the authorizing resolutions of the Board of Directors
until paid in full. Dividends on account of arrears for any past dividend may
be declared and paid at any time, without reference to such date, to holders of
record on such date, not exceeding 50 days preceding the payment date thereof,
as may be fixed by the Board of Directors. Each such dividend shall be paid to
the holders of record of the Series F Preferred Stock as their names appear on
the share register of the corporation on the corresponding record date.
(b) Subject to paragraphs 7(b) and 7(d), so long as any Series F
Preferred Stock remain outstanding, the Company shall
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not directly or indirectly pay any dividend or make any other distribution upon
any Junior Stock or Parity Stock or redeem, purchase or otherwise acquire (other
than purchases of Common Stock from current or former directors and employees
for consideration not to exceed the purchase price paid by such directors or
employees for such shares or, in the event such directors or employees have
entered into buyout agreements with the corporation requiring the corporation,
pursuant to paragraphs 3 and 4 of such agreements, to purchase shares of Common
Stock at fair market value, then for consideration not to exceed the fair market
value of such shares at the time of repurchase) directly or indirectly for any
consideration any Junior stock or Parity Stock, unless at the time of such
dividend, distribution, redemption, purchase or acquisition, the Company has
paid the full amount of the dividends accrued on the Series F Preferred Stock
then outstanding.
7. Covenants. So long as any shares of Series F Preferred Stock
shall be outstanding, the corporation shall not, without first obtaining the
affirmative vote or written consent of at least eighty-five percent (85%) of
such outstanding shares of Series F Preferred Stock;
a. amend, alter or repeal (by merger or otherwise) this Certificate
or the Certificate of Incorporation of the corporation, if such actions would
result in any adverse change in the rights, preferences, or privileges of the
Series F Preferred Stock, or the restrictions provided for the benefit of, the
Series F Preferred Stock;
b. pay or declare any dividend or make any distribution upon on any
shares of Junior Stock (other than dividends payable in shares of the class or
series upon which such dividends are declared or paid, or payable in shares of
Common Stock);
c. increase the authorized number of shares of Series F Preferred
Stock;
d. redeem, purchase or otherwise acquire any shares of any Parity
Stock or any Junior Stock (other than purchases of Common Stock from current or
former directors or employees for consideration not to exceed the purchase price
paid by such director or employee for such shares or, in the event such
directors or employees have entered into buyout agreements with the corporation
requiring the corporation, pursuant to paragraphs 3 and 4 of such agreements, to
purchase shares of Common Stock at fair market value, then for consideration not
to exceed the fair market value of such shares at the time of repurchase),
e. reclassify any then outstanding class or series of any Junior
Stock into Parity Stock or stock having any preference
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or priority as to the right to receive dividends or distributions or as to
rights on liquidation, dissolution or winding up of the corporation, ranking
senior in preference or priority to the Series F Preferred Stock or reclassify
any then outstanding series of Parity Stock into stock having any preference or
priority as to right to receive dividends or distributions, or as to rights on
liquidation, dissolution or winding up of the corporation ranking senior in
preference or priority to the Series F Preferred Stock;
f. materially change the principal business of the corporation.
8. Registration of Transfer. The corporation shall keep all its
principal office a register for the registration of Series F Preferred Stock.
Upon the surrender of any certificate representing Series F Preferred Stock at
such place, the corporation shall, at the request of the record holder of such
certificate, execute and deliver (at the corporation's expense) a new
certificate or certificates in exchange therefor representing in the aggregate
the number of shares represented by the surrendered certificate. Each such new
certificate shall be registered in such name and shall represent such number of
shares as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends,
to the extent they have accrued, shall accrue on the Series F Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such Series F Preferred Stock represented by the surrendered
certificate.
9. Replacement. Upon receipt of evidence reasonably satisfactory to
the corporation (an affidavit of the registered holder shall be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of any class of Series F Preferred Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity reasonable
satisfactory to the corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement shall be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lot, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Series F Preferred Stock
represented by such new certificate from the date to which dividends have been
fully paid on such lost, stolen, destroyed or mutilated certificate.
10. Amendment and Waiver. No amendment, modification or waiver shall
be binding or effective with respect to any
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provisions hereof without the prior written consent of the holders of at least
eighty-five percent (85%) of the Series F Preferred Stock outstanding at the
time such action is taken. Further, no change in the terms hereof may be
accomplished by merger or consolidation of the corporation with another
corporation or entity unless the corporation has obtained the prior written
consent of the holders of the applicable percentage of the Series F Preferred
Stock then outstanding.
11. Notices. Except as otherwise expressly provided hereunder, all
notices referred to herein shall be in writing and shall be delivered by
registered or certified mail, return receipt requested and postage prepaid, or
by reputable overnight courier service, charged prepaid, and shall be deemed to
have been given when so mailed or sent (i) to the corporation, at its principal
executive offices, and (ii) to any stockholder, at such holder's address as it
appears in the stock records of the corporation (unless otherwise indicated by
any such holder).
12. Residual Rights. All rights accruing to the outstanding shares of
the corporation not expressly provided for to the contrary in this or any other
Certificate of Designations of any other series of Preferred Stock shall be
vested in the Common Stock.
13. Headings and Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
14. Severability. If any right, preference or limitation of the Series F
Preferred Stock set forth in this resolution (as such resolution may be amended
from time to time) is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other rights, preferences and
limitations set forth in this resolution (as so amended) which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless, remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
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IN WITNESS WHEREOF, said Health Data Sciences Corporation has caused this
Certificate to be signed by Ralph A. Korpman, its Chairman of the Board, and
attested by Janice E. Ticich, its Secretary, this 27 day of June, 1995.
HEALTH DATA SCIENCES CORPORATION
By:/s/ Ralph A. Korpman
------------------------------
RALPH A. KORPMAN
Chairman of the Board
ATTEST:
By:/s/ Janice E. Ticich
---------------------------
JANICE E. TICICH, Secretary
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STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
RALPH A. KORPMAN, being first duly sworn, deposes and says that,
He is the Chairman of the Board of the Delaware corporation herein
mentioned; the matters set forth herein be true to his own knowledge; and the
signature purporting to be the signature of said RALPH A. KORPMAN is his genuine
signature.
/s/ Ralph A. Korpman
------------------------------
RALPH A. KORPMAN
Subscribed and sworn to before me on June 27, 1995.
/s/ Carolyn K. Krupp
------------------------------
[SEAL] NOTARY PUBLIC - San Bernardino
State of California
STATE OF CALIFORNIA )
) ss.
COUNTY OF SAN BERNARDINO )
JANICE E. TICICH, being first duly sworn, deposes and says that:
She is the Secretary of the Delaware corporation herein mentioned; the
matters set forth herein are true to her own knowledge; and the signature
purporting to be the signature of said JANICE E. TICICH is her genuine
signature.
/s/ Janice E. Ticich
------------------------------
JANICE E. TICICH
Subscribed and sworn to before me on June 27, 1995.
/s/ Carolyn K. Krupp
[SEAL] ------------------------------
NOTARY PUBLIC - San Bernardino
State of California
19
111
DELAWARE CERTIFICATE OF MERGER
OF
HDSSUB, INC.
WITH AND INTO
HEALTH DATA SCIENCES CORPORATION
---------------
The undersigned corporation, organized and existing under and by virtue of
the Delaware General Corporation Law (the "DGCL"), DOES HEREBY CERTIFY:
1. HDSSub, Inc. ("HDSSub"), a Delaware corporation, is merging with and
into Health Data Sciences Corporation ("HDS"), a Delaware corporation (the
"Merger").
2. The Amended and Restated Merger Agreement has been approved, adopted,
certified, executed and acknowledged by HDS and HDSSub, in accordance with
Section 251(c) of the DGCL.
3. HDS will be the surviving Delaware corporation following the Merger,
using the name "Health Data Sciences Corporation."
4. The Certificate of Incorporation of HDS will, as amended pursuant to
this Certificate of Merger, continue after the Merger as the Certificate of
Incorporation of the surviving corporation until thereafter duly amended in
accordance with its terms and the DGCL.
5. The executed Amended and Restated Merger Agreement pursuant to which
the Merger is being consummated is on file at the principal place of business
of the surviving corporation. The address of the principal place of business
of the surviving corporation is c/o Medaphis Corporation, 2700 Cumberland
Parkway, Suite 300, Atlanta, Georgia 30339.
6. A copy of the Amended and Restated Merger Agreement will be furnished
by the surviving corporation, on request and without cost, to any stockholder
of any constituent corporation.
7. Article 4 of HDS's Certificate of Incorporation is hereby amended to
read in full as follows:
"The aggregate number of shares that the Corporation shall have authority
to issue is 1,000, all of which shall be shares of common stock, par value
$0.01 per share."
112
IN WITNESS WHEREOF, HDS has caused its duly authorized officer to
execute and deliver this Certificate of Merger as of the 29th day of June, 1996.
HEALTH DATA SCIENCES CORPORATION
By: /s/ Ralph A. Korpman, M.D.
-------------------------------------------
Name: Ralph A. Korpman, M.D.
Title: Chairman and Chief Executive Officer
2