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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CERUS CORPORATION
MITCHELL R. TRUELOCK hereby certifies that:
1. He is Sole Incorporator of Cerus Corporation, a Delaware corporation
(the "Corporation"), which filed its original Certificate of Incorporation on
July 31, 1996.
2. No officers or directors have been elected.
3. The Amended and Restated Certificate of Incorporation, in the form
attached as Exhibit A, has been duly adopted in accordance with the provisions
of Sections 241 and 245 of the General Corporation Law of the State of Delaware
(the "Delaware Code") by the Sole Incorporator of the Corporation.
4. The Amended and Restated Certificate of Incorporation so adopted
reads in its entirety as set forth on Exhibit A attached hereto and is hereby
incorporated by reference.
5. Pursuant to Section 241 of the Delaware Code, the Corporation has
not received payment for any of its stock.
IN WITNESS WHEREOF, the undersigned has signed this certificate this
16th day of September, 1996, and hereby affirms and acknowledges under penalty
of perjury that the filing of this Amended and Restated Certificate of
Incorporation is the act and deed of Cerus Delaware Corporation.
CERUS CORPORATION
\s\ Mitchell Truelock
---------------------------
Mitchell R. Truelock
Sole Incorporator
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EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CERUS DELAWARE CORPORATION
I.
The name of this Corporation is Cerus Delaware Corporation.
II.
The address of the registered office of the Corporation in the State of
Delaware is 15 East North Street, City of Dover, County of Kent, and the name of
the registered agent of the Corporation in the State of Delaware at such address
is Incorporating Services, Ltd.
III.
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
IV.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is fifty-five million
(55,000,000) shares. Fifty million (50,000,000) shares shall be Common Stock,
each having a par value of one-tenth of one cent ($.001). Five million
(5,000,000) shares shall be Preferred Stock, each having a par value of
one-tenth of one cent ($.001).
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, by filing a certificate (a
"Preferred Stock Designation") pursuant to the Delaware General Corporation Law,
to fix or alter from time to time the designation, powers, preferences and
rights of the shares of each such series and the qualifications, limitations or
restrictions of any wholly unissued series of Preferred Stock, and to establish
from time to time the number of shares constituting any such series or any of
them; and to increase or decrease the number of shares of any series subsequent
to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
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B. Seven Hundred Sixty-One Thousand Seventy-Nine (761,079) of the
authorized shares of Preferred Stock are hereby designated "Series A Preferred
Stock" (the "Series A Preferred"), Three Hundred Five Thousand Four Hundred
Sixty-One (305,461) shares of the authorized shares of Preferred Stock are
hereby designated "Series B Preferred Stock" (the "Series B Preferred"), One
Million One Hundred Forty-Seven Thousand Four Hundred Forty-Nine (1,147,449)
shares of the authorized shares of Preferred Stock are hereby designated "Series
C Preferred Stock" (the "Series C Preferred"), Six Hundred Five Thousand
(605,000) shares of the authorized shares of Preferred Stock are hereby
designated Series D Preferred Stock (the "Series D Preferred") and Three Hundred
Eighty Thousand Nine Hundred Fifty-Three (380,953) shares of the authorized
shares of Preferred Stock are hereby designated "Series E Preferred Stock" (the
"Series E Preferred").
C. The rights, preferences, privileges, restrictions and other matters
relating to the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred and the Series E Preferred (hereinafter the
Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D
Preferred and the Series E Preferred shall be referred to collectively as the
"Preferred Stock") are as follows:
1. DIVIDEND RIGHTS.
a. Holders of Preferred Stock, in preference to the
holders of any Common Stock, shall be entitled to receive, when and if declared
by the Board of Directors, but only out of funds that are legally available
therefor, cash dividends at the rate of $0.46 per annum on each outstanding
share of Series A Preferred, $0.61 per annum on each outstanding share of Series
B Preferred, $0.96 per annum on each outstanding share of Series C Preferred,
$1.26 per annum on each outstanding share of Series D Preferred and $1.89 per
annum on each outstanding share of Series E Preferred. Such dividends shall be
non-cumulative, and no right shall accrue to the holders of Preferred Stock by
reason of the fact that dividends on such shares are not declared or paid in any
prior year.
b. So long as any shares of Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Common Stock, nor
shall any shares of any class of stock of the Company be purchased, redeemed, or
otherwise acquired for value by the Company or any subsidiary of the Company,
unless a corresponding dividend, distribution or redemption has been or is
simultaneously declared or made on the Preferred Stock and all declared but
unpaid dividends on the shares of outstanding Preferred Stock shall have been
paid or a sum sufficient for the payment thereof shall have been reserved
therefor. The provisions of this Section 1(b) shall not, however, apply to (i) a
dividend payable solely in stock, (ii) the acquisition of shares of any Common
Stock in exchange for shares of any Common Stock, (iii) the repurchase of shares
of Common Stock held by employees, officers, directors, consultants or other
persons performing services for the Company or any wholly-owned subsidiary that
are subject to restrictive stock purchase agreements under which the Corporation
has the option to repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment; or (iv) any repurchase of any
outstanding securities of the Company that is approved by not less than four
members of the Company's
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Board of Directors. The holders of the Preferred Stock expressly waive their
rights, if any, as described in California Corporations Code Sections 503 and
506 as they relate to repurchase of shares upon termination of employment.
c. Subject to the foregoing and to any further
limitations set forth herein, the Board of Directors may declare, out of any
funds legally available therefor, dividends upon the then outstanding shares of
any Common Stock; provided, however, that if any cash dividend or other
distribution is declared by the Board of Directors to be paid on the Common
Stock, then an additional dividend shall be paid at the same time to the holders
of the outstanding Preferred Stock at a rate per share (based upon the number of
shares of Common Stock into which the outstanding Preferred Stock is
convertible) equal to the rate at which cash dividends or other distributions
are paid or granted with respect to the Common Stock.
2. VOTING RIGHTS.
a. Except as otherwise provided herein or as required
by law, the shares of the Preferred Stock shall be voted equally with the shares
of the Common Stock of the Company and not as a separate class, at any annual or
special meeting of shareholders of the Company, and may act by written consent
in the same manner as the Common Stock, in either case upon the following basis:
each holder of shares of the Preferred Stock shall be entitled to such number of
votes as shall be equal to the whole number of shares of Common Stock into which
such holder's aggregate number of shares of Preferred Stock are convertible
(pursuant to Section 5 hereof) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
b. In addition to any other vote or consent required
herein or by law, the consent of the holders of at least two-thirds (2/3) of the
outstanding Preferred Stock voting together as a separate class, voting in
person or by proxy, either in writing without a meeting, or by a vote at any
meeting called for the purpose, shall be necessary for effecting or validating
the following actions:
(1) Any amendment, alteration, or repeal of
any provision of the Amended and Restated Articles of Incorporation or the
Bylaws of the Company (including any filing of a Certificate of Determination),
that affects adversely the voting powers, preferences, or other special rights
or qualifications, limitations, or restrictions of the Preferred Stock;
(2) Any creation of or any increase, whether
by reclassification or otherwise, in the authorized amount of any class or
series of equity securities of the Company ranking on a parity with or prior to,
or convertible or exercisable into a class or series ranking on a parity with or
prior to, the Preferred Stock in right of liquidation preference, voting or
dividends;
(3) Any agreement to encumber (except in
connection with a financing in the ordinary course of business for other than
equity financing purposes), sell,
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lease or otherwise dispose of all or substantially all of the assets, property
or business of the Company, or to merge or consolidate the Company with any
person, or permit any other person to merge into it, or any other
reorganization, transaction or series of transactions pursuant to which the
holders of the Company's outstanding voting securities immediately preceding
such merger, consolidation or other transaction or series of transactions fail
to hold equity securities representing a majority of the voting power of the
surviving entity immediately following such consolidation, merger or other
transaction or series of transactions;
(4) Any voluntary liquidation or dissolution of the
Company (as defined in Section 3(c) hereof); and
(5) Any redemption of, or payment of dividends with
respect to, Common Stock, other than a repurchase of Common Stock pursuant to
the exercise of any contractual or other legal rights of first refusal upon
termination of employment or a consulting arrangement or repurchase in
settlement of shareholder disputes; provided that this subparagraph (v) shall
not apply to any redemption of Preferred Stock pursuant to Section 4 hereof, or
any repurchase of any outstanding securities of the Company that is approved by
not less than four members of the Company's Board of Directors.
3. LIQUIDATION RIGHTS.
a. Upon any liquidation, dissolution, or winding up
of the Company, whether voluntary or involuntary, before any distribution or
payment of the assets of the Company shall be made to the holders of any Common
Stock, the holders of Preferred Stock shall be entitled to be paid out of the
assets of the Company an amount equal to the sum of (i) $3.85 plus all declared
but unpaid dividends on such shares to the date of such payment for each share
of Series A Preferred outstanding, (ii) $5.075 plus all declared but unpaid
dividends on such shares to the date of such payment for each share of Series B
Preferred outstanding, (iii) $8.00 plus all declared but unpaid dividends on
such shares to the date of such payment for each share of Series C Preferred
outstanding, (iv) $10.50 plus all declared but unpaid dividends on such shares
to the date of such payment for each share of Series D Preferred outstanding,
and (v) $15.75 plus all declared but unpaid dividends on such shares to the date
of such payment for each share of Series E Preferred outstanding, respectively.
If, upon any liquidation, distribution, or winding up, the assets of the Company
shall be insufficient to make payment in full under this Section 3(a) to all
holders of Preferred Stock, then such assets shall be distributed among the
holders of Preferred Stock at the time outstanding, ratably in proportion to the
full stated amounts to which they would otherwise be respectively entitled under
this Section 3(a).
b. After the payment of the full liquidation
preference of the Preferred Stock as set forth in Section 3(a) above, the
holders of the Common Stock and the holders of the Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred shall receive the remaining
assets on a pro rata basis (as if the shares of Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred had been converted to
shares of Common Stock as of the liquidation, dissolution or winding up of the
Company);
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provided, however, that the aggregate distributions made to the holders of
Series A Preferred, Series B Preferred, Series C Preferred and Series D
Preferred pursuant to Section 3(a) and this Section 3(b) shall not exceed $15.40
per share of Series A Preferred, $20.30 per share for each share of Series B
Preferred, $32.00 per share for each share of Series C Preferred, and $31.50 per
share for each share of Series D Preferred, respectively. Holders of series of
Preferred Stock created after the creation of the Series D Preferred will be
entitled to the full liquidation preference set forth in Section 3(a) above or
to convert their shares as provided in Section 5 below. Upon conversion of
shares as provided in Section 5, the holders of the Common Stock arising from
such converted shares will be entitled to receive such remaining assets on a pro
rata basis without being subject to the limitations set forth above in this
Section 3(b).
c. The following events shall be considered a liquidation,
dissolution or winding up under this Section 3:
(1) any consolidation or merger of the Company
with or into any other corporation or other entity or person, or any other
corporate reorganization or other transaction or series of transactions pursuant
to which the holders of the outstanding voting securities of the Company
immediately prior to such consolidation, merger, reorganization or other
transaction or series of transactions fail to hold equity securities
representing a majority of the voting power of the surviving entity immediately
following such consolidation, merger or reorganization or any transaction or
series of related transactions; or
(2) a sale, lease or other disposition of all
or substantially all of the assets of the Company.
d. Any securities to be delivered to the holders of
the Preferred Stock or Common Stock pursuant to a transaction treated as a
liquidation shall be valued as follows:
(1) Securities not subject to investment
letter or other similar restrictions on free marketability:
(i) If traded on a national
securities exchange or the National Market System of the National Association of
Securities Dealers, Inc. (the "NMS"), the value shall be deemed to be the
average of the security's closing prices on such exchange or the NMS over the
thirty (30) day period ending three (3) days prior to the closing;
(ii) If traded over-the-counter
(but not on the NMS), the value shall be deemed to be the average of the mean of
the closing bid and ask prices over the thirty (30) day period ending three (3)
days prior to the closing; or
(iii) If there is no active
public market, the value shall be the fair market value thereof, as mutually
determined by the Corporation and the holders
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of not less than fifty percent (50%) of the outstanding Preferred Stock, voting
together as a single class.
(2) The method of valuation of securities
subject to investment letter or other restrictions on free marketability shall
be to make an appropriate discount from the market value determined as above in
Sections 3(e)(i)(1), (2) or (3) to reflect the approximate fair market value
thereof, as mutually determined by the Corporation and the holders of not less
than fifty percent (50%) of the outstanding Preferred Stock, voting together as
a single class.
4. REDEMPTION.
The Company shall not have any right to require
redemption of the Preferred Stock, nor shall any holder of Preferred Stock be
entitled to require redemption of Preferred Stock.
5. CONVERSION RIGHTS.
The holders of the Preferred Stock shall have the
following rights with respect to the conversion of the Preferred Stock into
shares of Common Stock:
a. OPTIONAL CONVERSION. Subject to and in compliance
with the provisions of this Section 5, any shares of the Preferred Stock may, at
the option of the holder, be converted at any time into fully-paid and
nonassessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred, or Series E Preferred shall be entitled upon conversion
shall be the product obtained by multiplying, as the case may be, the "Series A
Conversion Rate," the "Series B Conversion Rate," the "Series C Conversion
Rate," the "Series D Conversion Rate," or the "Series E Conversion Rate" then in
effect (determined as provided in Section 5(b)) by the number of shares of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
or Series E Preferred being converted.
b. SERIES A, SERIES B, SERIES C, SERIES D AND SERIES
E CONVERSION RATES. The conversion rate in effect at any time for conversion of
the Series A Preferred (the "Series A Conversion Rate") shall be the quotient
obtained by dividing $3.85 by the "Series A Conversion Price," calculated as
provided in Section 5(c), the conversion rate in effect at any time for
conversion of the Series B Preferred (the "Series B Conversion Rate") shall be
the quotient obtained by dividing $5.075 by the "Series B Conversion Price,"
calculated as provided in Section 5(c), the conversion rate in effect at any
time for conversion of the Series C Preferred (the "Series C Conversion Rate")
shall be the quotient obtained by dividing $8.00 by the "Series C Conversion
Price," calculated as provided in Section 5(c), the conversion rate in effect at
any time for conversion of the Series D Preferred (the "Series D Conversion
Rate") shall be the quotient obtained by dividing $10.50 by the "Series D
Conversion Price," calculated as provided in Section 5(c), and the conversion
rate in effect at any time for conversion of the Series E Preferred (the "Series
E
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Conversion Rate") shall be the quotient obtained by dividing $15.75 by the
"Series E Conversion Price," calculated as provided in Section 5(c).
c. CONVERSION PRICE. The conversion price for the
Series A Preferred shall initially be $3.85 (the "Series A Conversion Price"),
the conversion price of the Series B Preferred shall initially be $5.075 (the
"Series B Conversion Price"), the conversion price of the Series C Preferred
shall initially be $8.00 (the "Series C Conversion Price"), the conversion price
of the Series D Preferred shall initially be $10.50 (the "Series D Conversion
Price") and the conversion price of the Series E Preferred shall initially be
$15.75 (the "Series E Conversion Price"). Such initial Conversion Price for each
series of Preferred Stock shall be adjusted from time to time in accordance with
this Section 5. All references to the Conversion Price herein shall mean the
Conversion Price as so adjusted. As used hereinafter, the term "Conversion
Price" shall refer to the Conversion Price for the Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred, or the
Series E Preferred, as applicable.
d. MECHANICS OF CONVERSION. Each holder of Preferred
Stock who desires to convert the same into shares of Common Stock pursuant to
this Section 5 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Company or any transfer agent for the Preferred
Stock, and shall give written notice to the Company at such office that such
holder elects to convert the same. Such notice shall state the number of shares
and the series of Preferred Stock being converted and the name or names in which
the certificate or certificates for shares of Common Stock are to be issued.
Thereupon, the Company shall promptly issue and deliver at such office to such
holder a certificate or certificates for the number of shares of Common Stock to
which such holder is entitled and shall promptly pay in cash or, to the extent
sufficient funds are not then legally available therefor, in Common Stock (at
the Common Stock's fair market value determined by the Board of Directors as of
the date of such conversion), any declared and unpaid dividends on the shares of
Preferred Stock being converted. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the certificates representing the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder of
such shares of Common Stock on such date. If the conversion is in connection
with the underwritten offering of securities registered pursuant to the
Securities Act of 1933, the conversion may, at the option of any holder
tendering Preferred Stock for conversion, be conditioned upon the closing with
the underwriter of the sale of securities pursuant to such offering, in which
event the persons to receive the Common Stock issuable upon such conversion of
the Preferred Stock shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
e. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If
the Company shall at any time or from time to time after the date that the first
share of Preferred Stock is issued (the "Original Issue Date") fix a record date
for the effectuation of a split or subdivision of the outstanding Common Stock,
the Conversion Price for the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred
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in effect immediately before that subdivision shall be proportionately
decreased. Conversely, if the Company shall at any time or from time to time
after the Original Issue Date combine the outstanding shares of Common Stock
into a smaller number of shares, the Conversion Price for the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series
E Preferred in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 5(e) shall become
effective at the close of business on the date the split, subdivision or
combination becomes effective.
f. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND
DISTRIBUTIONS. If the Company at any time or from time to time after the
Original Issue Date makes, or fixes 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, in each such event the Conversion
Price for the Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred and Series E Preferred that is then in effect shall be decreased as
of the time of such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by multiplying the Conversion Price
then in effect with respect to each such series of Preferred Stock by a fraction
(i) the numerator of which is the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance or the close of
business on such record date, and (ii) the denominator of which is the total
number of shares of Common Stock 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 is 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 Section 5(f) to reflect the actual payment of such
dividend or distribution or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of Common Stock.
g. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS.
If the Company at any time or from time to time after the Original Issue Date
makes or fixes a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, in each such event for purposes
of this subsection 5(g), provision shall be made so that the holders of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
and Series E Preferred shall receive upon conversion thereof, in addition to the
number of shares of Common Stock receivable thereupon, the amount of other
securities of the Company which they would have received had their Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series
E Preferred been converted into Common Stock as of the record date fixed for the
determination of the holders of Common Stock of the Company entitled to receive
such distribution and had they thereafter, during the period from the date of
such event to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect to
the rights of the holders of the Series A Preferred, Series B Preferred, Series
C Preferred, Series D Preferred, or Series E Preferred or with respect to such
other securities by their terms.
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h. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND
SUBSTITUTION. If at any time or from time to time after the Original Issue Date,
the Common Stock issuable upon the conversion of the Series A Preferred, Series
B Preferred, Series C Preferred, Series D Preferred, or Series E Preferred is
changed into the same or a different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section 5
or in Section 3), in any such event each holder of Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred shall
have the right thereafter to convert such stock into the kind and amount of
stock and other securities and property receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares of
Common Stock into which such shares of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred and Series E Preferred could have been
converted immediately prior to or as of such recapitalization, reclassification
or change, all subject to further adjustment as provided herein or with respect
to such other securities or property by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, or Series E
Preferred after such recapitalization, reclassification or change to the end
that the provisions of this Section 5 (including adjustment of the Conversion
Price then in effect and the number of shares issuable upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
and Series E Preferred) shall be applicable after that event and be as nearly
equivalent as practicable.
i. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES
OF ASSETS. If at any time or from time to time after the Original Issue Date,
there is a capital reorganization of the Common Stock (other than a
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 5 or in Section
3), as a part of such capital reorganization, provision shall be made so that
the holders of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred shall thereafter be entitled to
receive upon conversion of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred the number of shares of
stock or other securities or property of the Company or otherwise to which a
holder of the number of shares of Common Stock deliverable upon conversion would
have been entitled on such capital reorganization, subject to adjustment in
respect of such stock or securities by the terms thereof. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 5 with respect to the rights of the holders of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred after the capital reorganization to the end that the provisions of
this Section 5 (including adjustment of the Conversion Price then in effect and
the number of shares issuable upon conversion of the Series A Preferred, Series
B Preferred, Series C Preferred, Series D Preferred and Series E Preferred)
shall be applicable after that event and be as nearly equivalent as practicable.
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j. SALE OF SHARES BELOW CONVERSION PRICE.
(i) If at any time or from time to time after
the Original Issue Date, the Company issues or sells, or is deemed by the
express provisions of this subsection (j) to have issued or sold, Additional
Shares of Common Stock (as hereinafter defined), other than as a dividend or
other distribution on any class of stock as provided in Section 5(f) above, and
other than a subdivision or combination of shares of Common Stock as provided in
Section 5(e) above, for an Effective Price (as hereinafter defined) less than
the then effective Conversion Price for the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred, or Series E Preferred, then
and in each such case the then existing Conversion Price for each such series of
Preferred Stock for which the Effective Price is less than the Conversion Price
shall be reduced, as of the opening of business on the date of such issue or
sale, to a price determined by multiplying the Conversion Price for such series
by a fraction (1) the numerator of which shall be (A) the number of shares of
Common Stock deemed outstanding (as defined in the following sentence) at the
close of business on the day preceding the date of such issue or sale, plus (B)
the number of shares of Common Stock which the aggregate consideration received
(as defined in subsection (j)(ii)) by the Company for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price, and (2) the denominator of which shall be the number of shares of Common
Stock deemed outstanding (as defined below) at the close of business on the date
of such issue. For the purposes of the preceding sentence, all outstanding
shares of Common Stock and all shares of Common Stock issuable upon conversion
of Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred and Series E Preferred or upon exercise of warrants (excluding any
warrants as to which the exercise price then exceeds the Effective Price for
such Additional Shares of Common Stock) and conversion of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series
E Preferred subject to such warrants that are outstanding as of the close of
business on the day preceding the date of issue or sale of Additional Shares of
Common Stock shall be deemed outstanding.
(ii) For the purpose of making any adjustment
required under this Section 5(j), the consideration received by the Company for
any issue or sale of securities shall (1) to the extent it consists of cash, be
computed at the net amount of cash received by the Company after deduction of
any underwriting or similar commissions, compensation or concessions paid or
allowed by the Company in connection with such issue or sale but without
deduction of any expenses payable by the Company, (2) to the extent it consists
of property other than cash, be computed at the fair value of that property as
determined in good faith by the Board of Directors, and (3) if Additional Shares
of Common Stock, Convertible Securities (as hereinafter defined) or rights or
options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the Company for a consideration which covers both, be computed as the
portion of the consideration so received that may be reasonably determined in
good faith by the Board of Directors to be allocable to such Additional Shares
of Common Stock, Convertible Securities or rights or options.
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(iii) For the purpose of the adjustment
required under this Section 5(j), if the Company issues or sells any rights or
options for the purchase of, or stock or other securities then convertible into,
Additional Shares of Common Stock (such convertible stock or securities being
herein referred to as "Convertible Securities") and if the Effective Price of
such Additional Shares of Common Stock is less than the Conversion Price then in
effect with respect to any series of Preferred Stock, in each case the Company
shall be deemed to have issued at the time of the issuance of such rights or
options or Convertible Securities the number of Additional Shares of Common
Stock issuable upon exercise or conversion thereof and to have received as
consideration for the issuance of such shares an amount equal to the total
amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities, plus, in the case of such
rights or options, the amounts of consideration, if any, payable to the Company
upon the exercise of such rights or options, plus, in the case of Convertible
Securities, the amounts of consideration, if any, payable to the Company (other
than by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof; provided further that if the amount of
consideration payable to the Company upon the exercise or conversion of rights,
options or Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution
adjustments, the Effective Price shall be recalculated using the figure to which
such amount of consideration is reduced; provided further that if the amount of
consideration payable to the Company upon the exercise or conversion of such
rights, options or Convertible Securities is subsequently increased, the
Effective Price shall be again recalculated using the increased amount of
consideration payable to the Company upon the exercise or conversion of such
rights, options or Convertible Securities. No further adjustment of the
Conversion Price, as adjusted upon the issuance of such rights, options or
Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights or options
or the conversion of any such Convertible Securities. If any such rights or
options or the conversion privilege represented by any such Convertible
Securities shall expire without having been exercised, the Conversion Price as
adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the Conversion Price which would have been in effect had
an adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such readjustment shall not apply to prior
conversions of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred.
(iv) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued by the Company, whether or not
subsequently reacquired or
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retired by the Company, other than (1) shares of Common Stock issued upon
conversion of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred; (2) shares of Common Stock (and/or
options, warrants or other Common Stock purchase rights, and the Common Stock
issued pursuant to such options, warrants and other rights) issued or to be
issued to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements not to exceed an aggregate of 600,000 shares of Common Stock
as such number may be increased from time to time by the Company's Board of
Directors with the approval of at least four members of the Company's Board of
Directors; (3) shares of Common Stock issued pursuant to the exercise of
options, warrants or convertible securities outstanding as of the Original Issue
Date; (4) shares of Common Stock (and/or options, warrants, preferred stock or
other common stock issued pursuant to such options, warrants, preferred stock or
other rights) issued in connection with leasing arrangements not to exceed an
aggregate of 200,000 shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights, and the Common Stock issued pursuant to such
options, warrants or other rights) as such number may be increased from time to
time by the Company's Board of Directors with the approval of at least four
members of the Company's Board of Directors; and (5) shares of Common Stock
issued as a function of antidilution or similar protective clauses. The
"Effective Price" of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the Company under this
Section 5(j), into the aggregate consideration received, or deemed to have been
received by the Company for such issue under this Section 5(j), for such
Additional Shares of Common Stock.
k. ACCOUNTANTS' CERTIFICATE OF ADJUSTMENT. In each
case of an adjustment or readjustment of the Conversion Price for the number of
shares of Common Stock or other securities issuable upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
or Series E Preferred, if the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, or Series E Preferred is then convertible
pursuant to this Section 5, the Company, at its expense, shall compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to each registered holder of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
or Series E Preferred at the holder's address as shown in the Company's books.
The certificate shall set forth such adjustment or readjustment, showing in
detail the facts upon which such adjustment or readjustment is based, including
a statement of (i) the consideration received or deemed to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued or sold, (ii) the Conversion Price with respect to such series
of Preferred Stock at the time in effect, (iii) the number of Additional Shares
of Common Stock and (iv) the type and amount, if any, of other property which at
the time would be received upon conversion of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred, or Series E Preferred.
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l. AUTOMATIC CONVERSION.
(i) Each share of Preferred Stock shall
automatically be converted into shares of Common Stock, based on the
then-effective Conversion Price with respect to such share; at any time (1) more
than two-third of the shares of Preferred Stock authorized and issued and
outstanding have converted into Common Stock pursuant to this Section 5, or (2)
immediately upon the closing of a firmly underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Common Stock for the account of the
Company in which the per share price is at least $13.13, appropriately adjusted
for any stock splits, stock combinations, stock dividends, recapitalizations and
the like, and the gross cash proceeds to the Company, less underwriting
discounts, commissions and fees, are at least $10,000,000.
(ii) Upon the occurrence of the event
specified in paragraph (i) above, the outstanding shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; provided, however,
that the Company shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred are either delivered to the
Company or its transfer agent as provided below, or the holder notifies the
Company or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates. Upon
the occurrence of such automatic conversion of the Preferred Stock, the holders
of Preferred Stock shall surrender the certificates representing such shares at
the office of the Company or any transfer agent for the Preferred Stock.
Thereupon, there shall be issued and delivered to such holder promptly at such
office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Common Stock into
which the shares of Preferred Stock surrendered were convertible on the date on
which such automatic conversion occurred, and the Company shall promptly pay in
cash or, at the option of the Company, Common Stock (at the Common Stock's fair
market value determined by the Board as of the date of such conversion), or, at
the option of the Company, both, all declared and unpaid dividends on the shares
of Preferred Stock being converted, to and including the date of such
conversion.
m. FRACTIONAL SHARES. No fractional shares of Common
Stock shall be issued upon conversion of Preferred Stock and the number of
shares of Common Stock to be issued shall be rounded to the nearest whole share.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred, or Series E
Preferred the holder is at the time converting into Common Stock and the number
of shares of Common Stock issuable upon such aggregate conversion.
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n. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
o. OTHER ADJUSTMENTS. No adjustment of the Conversion
Price for the Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred, or Series E Preferred shall be made in an amount less than one cent
per share, provided that any adjustments which are not required to be made by
reason of this sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to 3 years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of 3 years from the date of the event giving rise to the adjustment
being carried forward. Except to the limited extent provided for in subsections
5(j)(iii), no adjustment of such Conversion Price pursuant to subsection 5(j)
shall have the effect of increasing the Conversion Price above the Conversion
Price in effect immediately prior to such adjustment.
p. NOTICES. Any notice required by the provisions of
this Section 5 to be given to the holders of shares of the Preferred Stock shall
be deemed given upon the earlier of actual receipt or seventy-two (72) hours
after the same has been deposited in the United States mail, by certified or
registered mail, return receipt requested, or first class mail postage prepaid,
and addressed to each holder of record at the address of such holder appearing
on the books of the Company.
q. PAYMENT OF TAXES. The Company will pay all taxes
(other than taxes based upon income) and other governmental charges that may be
imposed with respect to the issue or delivery of shares of Common Stock upon
conversion of shares of Preferred Stock, excluding any tax or other charge
imposed in connection with any transfer involved in the issue and delivery of
shares of Common Stock in a name other than that in which the shares of
Preferred Stock so converted were registered.
r. NO DILUTION OR IMPAIRMENT. The Company shall not
amend its Articles of Incorporation or participate in any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, for the purpose of avoiding or seeking
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good faith assist
in carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against dilution or other impairment.
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6. NOTICES OF RECORD.
a. Upon any taking by the Company 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 or other distribution, or upon
any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any transfer
of all or substantially all the assets of the Company to any other person, or
any voluntary or involuntary dissolution, liquidation or winding up of the
Company, or any shareholders' meeting to approve the terms thereof, the Company
shall mail to each holder of Preferred Stock at least twenty (20) days prior to
the record date specified therein a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend or distribution and
a description of such dividend or distribution, (ii) the date on which any such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and the date of the
shareholders meeting to approve the terms thereof, if applicable, (iii) the
date, if any, that is to be fixed as to when the holders of record of Common
Stock (or other securities) shall be entitled to exchange their shares of Common
Stock (or other securities) for securities or other property deliverable upon
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up, and (iv) the material terms thereof.
7. NO REISSUANCE OF PREFERRED STOCK. No share or shares of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred,
or Series E Preferred acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued. The Articles of
Incorporation shall be appropriately amended to reflect the consequent valuation
in the Company's authorized capital stock.
V.
A. The following is applicable to the Common Stock:
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of
all classes of stock at the time outstanding having prior rights as to
dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the Company
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the Company, the assets of the Company shall be distributed as
provided in Section 3, Division C of Article III hereof.
3. REDEMPTION. The Common Stock is not redeemable.
4. VOTING RIGHTS. The holder of each share of Common Stock
shall have the right to one vote, and shall be entitled to notice of any
shareholders' meeting in
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accordance with the Bylaws of the Company, and shall be entitled to vote upon
such matters and in such manner as may be provided by law.
VI.
For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
A.
1. The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors. The number
of directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors.
2. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the initial public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), covering the offer and sale of Common Stock to the public (the "Initial
Public Offering"), the directors shall be divided into three classes designated
as Class I, Class II and Class III, respectively. Directors shall be assigned to
each class in accordance with a resolution or resolutions adopted by the Board
of Directors. At the first annual meeting of stockholders following the closing
of the Initial Public Offering, the term of office of the Class I directors
shall expire and Class I directors shall be elected for a full term of three
years. At the second annual meeting of stockholders following the Closing of the
Initial Public Offering, the term of office of the Class II directors shall
expire and Class II directors shall be elected for a full term of three years.
At the third annual meeting of stockholders following the closing of the Initial
Public Offering, the term of office of the Class III directors shall expire and
Class III directors shall be entered for a full-term of three years. At each
succeeding annual meeting of stockholders, directors shall be elected for a full
term of three years to succeed the directors of the class whose terms expire at
such annual meeting.
Notwithstanding the foregoing provisions of this Article, each
director shall serve until his successor is duly elected and qualified or until
his death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
3. Subject to the rights of the holders of any series of
Preferred Stock, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall,
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by the stockholders, except as
otherwise provided by law, be filled only by the affirmative vote of a majority
of the
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directors then in office, even though less than a quorum of the Board of
Directors, and not by the stockholders. Any director elected in accordance with
the preceding sentence shall hold office for the remainder of the full term of
the director for which the vacancy was created or occurred and until such
director's successor shall have been elected and qualified.
B.
1. Subject to paragraph (h) of Section 43 of the Bylaws, the
Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote
of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of
all of the then-outstanding shares of voting stock of the Corporation entitled
to vote at an election of directors (the "Voting Stock"). The Board of Directors
shall also have the power to adopt, amend, or repeal Bylaws.
2. The directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws and following the closing of the Initial Public
Offering no action shall be taken by the stockholders by written consent.
4. Advance notice of stockholder nominations for the election
of directors and of business to be brought by stockholders before any meeting of
the stockholders of the Corporation shall be given in the manner provided in the
Bylaws of the Corporation.
VII.
A. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
B. Any repeal or modification of this Article VII shall be prospective
and shall not affect the rights under this Article VII in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability or
indemnification.
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VIII.
A. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, except as provided in paragraph B of this
Article VIII, and all rights conferred upon the stockholders herein are granted
subject to this reservation.
B. Notwithstanding any other provisions of this Certificate of
Incorporation or any provision of law which might otherwise permit a lesser vote
or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal Articles VI, VII
and VIII.
18.