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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
(Pursuant to Section 245 of the Delaware General Corporation Law)
Paul Wilde and Mark A. Bertelsen hereby certify that:
1. They are the Vice President and Assistant Secretary of Synon
Corporation, a Delaware Corporation.
2. The Certificate of Incorporation of this corporation,
originally filed with the Secretary of State of Delaware on May 11, 1990, is
hereby amended and restated in its entirety to read as follows:
"FIRST: The name of the Corporation is Synon Corporation (the
"Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle, Zip
Code 19801. The name of its registered agent at such address
is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH: This Corporation is authorized to issue two classes of shares
to be designated, respectively, Common Stock and Preferred
Stock. The total number of shares of Common Stock this
Corporation shall have authority to issue is 25,000,000 and
the total number of shares of Preferred Stock this Corporation
shall have authority to issue is 10,000,000. The par value of
the Common Stock and the Preferred Stock shall be $0.001. Upon
the filing of this Amended and Restated Certificate of
Incorporation, each share of Series B Preferred Stock
outstanding immediately prior to the filing of this Amended
and Restated Certificate of Incorporation shall be
reconstituted as and converted into 0.48394 shares of Series D
Preferred Stock with the rights, preferences, privileges and
restrictions set forth herein, and each share of Series C
Preferred Stock outstanding immediately prior to the filing of
this Amended and Restated Certificate of Incorporation shall
be reconstituted as and converted into 0.1906433 shares of
Series A Preferred Stock with the rights, preferences,
privileges and restrictions set forth herein. No fractional
shares shall be issued upon such reconstitution and conversion
of the Series B and 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 conversion price applicable to the
shares being reconstituted and converted immediately prior to
the filing of this Amended and Restated Certificate of
Incorporation.
The Preferred Stock may be issued from time to time in one or
more series. A portion of the Preferred Stock shall initially
be designated as two series, namely, Series A Preferred Stock
(the "Series A Preferred"), consisting of 2,554,620 shares,
and Series D Preferred Stock (the "Series D Preferred"),
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consisting of 3,618,269 shares. The Board of Directors is
hereby authorized to fix or alter the dividend rights,
dividend rate, conversion rights, voting rights, rights and
terms of redemption (including sinking fund provisions),
redemption price or prices, and liquidation preferences of any
wholly unissued series of Preferred Stock, and the number of
shares constituting any such series and the designation
thereof, or any of them.
The Board of Directors is further authorized to increase or
decrease (but not below the number of shares thereof then
outstanding) the number of shares of any series, the number of
which was fixed by it, subsequent to the issue of shares of
such series then outstanding, subject to the limitations and
restrictions stated in the Certificate of Incorporation or the
resolution of the Board of Directors originally fixing the
number of shares of such series. If the number of shares of
any series is so decreased, then the shares constituting such
decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of
shares of such series.
The Corporation shall from time to time in accordance with the
laws of the State of Delaware increase the authorized amount
of its Common Stock if at any time the number of shares of
Common Stock remaining unissued and available for issuance
shall not be sufficient to permit conversion of the Series A
Preferred and Series D Preferred.
The relative rights, preferences, privileges and restrictions granted
to or imposed on the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. Dividends. The holders of Series A Preferred, Series D
Preferred and Common Stock shall be entitled to receive dividends on a pari
passu basis when and as declared by the Board of Directors, out of funds
legally available therefor. Such dividends shall not be cumulative and no
right to such dividends shall accrue to holders of the Preferred Stock and
Common Stock except as declared by the Board of Directors.
2. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the stockholders of the Corporation shall be made in the
following manner:
(a) First, holders of Series D Preferred 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 Corporation's
other stock, the amount of $3.35 per share and, in addition, an amount equal to
any declared but unpaid dividends on the Series D Preferred shares then held by
them. If the assets and funds thus distributed among the holders of the Series
D Preferred shall be insufficient to permit the payment to such holders of the
full aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Series D Preferred based on the number of shares of
Series D Preferred held.
(b) Second, holders of Series A Preferred 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 Corporation's
Common Stock, the amount of $8.503194 per share and, in addition, an amount
equal to any declared but unpaid dividends on the Series A Preferred shares
then held by them. If, after payment has been made to the holders of Series D
Preferred of the full amounts to which they shall be entitled as aforesaid, the
assets and funds thus distributed among the holders of the Series A Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the remaining assets and funds of the
corporation legally available for
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distribution shall be distributed ratably among the holders of the Series A
Preferred based on the number of shares of Series A Preferred held.
(c) Third, holders of Series D Preferred and Common Stock
shall be entitled to receive the amount of $8.503194 per share and, in
addition, an amount equal to any declared but unpaid dividends on the Series D
Preferred or Common Stock shares then held by them. If, after payment has been
made to the holders of Series D Preferred and Series A Preferred of the full
amounts to which they shall be entitled pursuant to subsections (a)-(b) above,
the assets and funds thus distributed among the holders of the Series D
Preferred and Common Stock pursuant to this subsection (c) shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the remaining assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series D Preferred and Common Stock based on the number of
shares of Common Stock held, assuming conversion of the Series D Preferred into
Common Stock.
(d) After payment has been made to the holders of
Preferred Stock and Common Stock as discussed above in subsections (a)-(c),
the holders of Series A Preferred, Series D Preferred and Common Stock shall be
entitled to share ratably in the remaining assets and funds of the Corporation
based on the number of shares of Common Stock held, assuming conversion of the
Series A Preferred and Series D Preferred into Common Stock.
(e) For purposes of this Section 2, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or a sale of all or substantially all of the assets of the
Corporation, shall be treated as a liquidation, dissolution or winding up of
the Corporation, unless the stockholders of the Corporation hold at least 50%
of the outstanding voting equity securities of the surviving corporation in
such merger, consolidation or sale of assets reorganization.
(f) Each holder of an outstanding share of Preferred
Stock shall be deemed to have consented, for all purposes, 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.
3. Voting Rights.
(a) General Voting. Except as otherwise required by law,
the holder of each share of Common Stock shall be entitled to one vote and the
holder of each share of Preferred Stock shall be entitled to the number of
votes equal to the number of shares of Common Stock into which the Preferred
Stock could be converted at the record date for determination of the
stockholders entitled to vote on such matters, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited, and, except as otherwise expressly provided herein
or required by law, such votes to be counted together with all other shares of
stock of the Corporation having general voting power and not separately as a
class.
(b) Notice; Fractional Shares. Holders of Common Stock
and Preferred Stock shall be entitled to notice of any stockholders' meeting in
accordance with the Bylaws of the Corporation. Fractional votes by the holders
of Preferred Stock shall not, however, be permitted and any fractional voting
rights resulting hereunder (after aggregating all shares into which shares of
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number.
4. Conversion. The holders of the Preferred Stock have
conversion rights as follows:
(a) Right to Convert.
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(i) Series A Preferred. Each share of Series A
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, into one fully paid and
nonassessable share of Common Stock.
(ii) Series D Preferred. Each share of Series D
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share, into one fully paid and
nonassessable share of Common Stock and, in addition, the amount of $3.35 in
cash or, at the election of the Corporation, equity securities of the
Corporation with an agreed-upon or appraised market value of $3.35 (such cash
or securities equivalent to $3.35 referred to herein as the "Series D
Conversion Consideration"). In the event the Corporation elects to issue
securities with an appraised market value of $3.35, such appraisal shall be
made by the Corporation's independent auditors, by a party selected by the
Corporation's independent auditors or by a party otherwise acceptable to the
Corporation and to the holder converting such shares of Series D Preferred
Stock.
(b) Automatic Conversion. Each share of Series A
Preferred Stock shall automatically be converted into one share of Common Stock
and each share of Series D Preferred Stock shall automatically be converted
into one share of Common Stock and, in addition, the Series D Conversion
Consideration upon the occurrence of any of the following events: (A) the
closing of a firm commitment, 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 of the Corporation to the public at
a minimum price per share (prior to underwriting commissions and offering
expenses) of $10.00 per share (appropriately adjusted for any stock split,
stock dividend, combination, recapitalization or similar event) and an
aggregate gross offering price of not less than $10,000,000; or (B) the
approval of such conversion by the vote of holders of more than 50% of the
aggregate number of outstanding shares of Preferred Stock. In the event of the
automatic conversion of the Preferred Stock upon a public offering as
aforesaid, the person(s) entitled to receive the Common Stock and, in the case
of holders of Series D Preferred Stock, the Series D Conversion Consideration
issuable upon such conversion of Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(iii) Mechanics of Conversion. No fractional
shares of Common Stock shall be issued upon conversion of the 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 fair market value of the Common Stock as determined by the Board of
Directors. Before any holder of Preferred Stock shall be entitled to convert
the same into full shares of Common Stock, to receive certificates therefor
and, in the case of holders of Series D Preferred Stock, to receive the Series
D Conversion Consideration, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of
any transfer agent for the Preferred Stock, and shall give written notice to
the Corporation at such office that he or she elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
Section 4(a)(ii)), the outstanding shares of Preferred Stock 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
Corporation or its transfer agent and provided further that the Corporation
shall not be obligated to issue certificates evidencing conversion and, in the
case of Series D Preferred Stock, to issue the Series D Conversion
Consideration unless the certificates evidencing such shares of Preferred Stock
are either delivered to the Corporation or its transfer agent as provided
above, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. The Corporation shall, as
soon as practicable after such delivery, issue and deliver at such office to
such holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid, a
check payable to the holder in the amount of any cash amounts payable as the
result of a conversion into fractional shares of Common Stock and, in the
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case of holders of Series D Preferred Stock, the Series D Conversion
Consideration. 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
Preferred Stock to be converted, or in the case of automatic conversion on the
date of closing of the public offering or on the date agreed upon by the
stockholders approving a conversion, and the person or persons entitled to
receive the shares of Common Stock and, in the case of Series D Preferred
Stock, the Series D Conversion Consideration issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such
shares of Common Stock and, in the case of holders of Series D Preferred Stock,
such Series D Conversion Consideration on such date.
5. Preemptive Rights.
(a) All shares of capital stock, including securities
convertible into capital stock, which the Corporation proposes to issue (other
than issuances in accordance with subsection (b) below) shall first be offered
to the Corporation's stockholders pro rata based on their share ownership of
Common Stock and Preferred Stock. The offer shall be made by notice specifying
the number of shares offered, and limiting a period (not less than fourteen
days) within which the offer, if not accepted, will be deemed to be declined.
After the expiration of such period, those shares deemed to be declined shall
be offered pro rata to the persons who have, within the said period, accepted
all the shares offered to them; such further offer shall be made on the same
terms and in the same manner as the original offer. Any shares not accepted
pursuant to such offer or further offer as aforesaid shall be under the control
of the Corporation who may allot, grant options over or otherwise dispose of
the same to such persons, on such terms, and in such manner as it thinks fit,
provided however that such shares shall not be disposed of on terms which are
more favorable to the subscribers therefor than the terms on which they were
offered to the stockholders of the Corporation.
(b) The preemptive rights contained in Section 5(a) above
shall not apply to or in respect of the issuance of or grant of options over
shares in the Corporation as follows:
(i) pursuant to any stock benefit plan or stock
option agreement approved by the Board of Directors;
(ii) pursuant to an acquisition of shares in the
Corporation's subsidiaries in exchange for shares in the Corporation;
(iii) any shares of Common Stock issued upon the
conversion of shares of Preferred Stock pursuant to Section 4 of this Article;
(iv) any shares of Series D Preferred Stock;
(v) pursuant to a public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended;
(vi) pursuant to any sales, technology license or
distribution agreements or other strategic relationships approved by the Board
of Directors; or
(vii) pursuant to any acquisition approved by the
Board of Directors in exchange for shares in the Corporation, provided that the
number of shares to be exchanged does not exceed 15% of the total number of
shares of Series A Preferred, Series D Preferred and Common Stock of the
Corporation outstanding at the time of such acquisition.
(c) The provisions of this Section 5 may be amended only
by the approval of the holders of seventy-five percent (75%) of the Common
Stock and Preferred Stock voting together.
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(d) Notwithstanding the foregoing, the preemptive rights
granted pursuant to this Section 5 shall terminate upon the earlier to occur of
the closing of a firm commitment underwritten public offering registered under
the Securities Act of 1933, as amended, or such time as the corporation is
required to file reports pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934, as amended.
6. Covenants. In addition to any other rights provided by law,
the following covenants apply with regard to the holders of the Corporation's
securities:
(a) so long as any Series A Preferred or Series D
Preferred shall be outstanding, this Corporation shall not, without first
obtaining the affirmative vote of the holders of a majority of such outstanding
shares of Series A and Series D Preferred voting together:
(i) effect a split or reverse-split on the Common
Stock,
(ii) amend or repeal any provision of, or add any
provision to, this Corporation's Certificate of Incorporation if such action
would alter or change the rights, preferences, privileges and restrictions of
the Series A or Series D Preferred, or increase or decrease the number of
shares of Series A or Series D Preferred authorized hereby,
(iii) authorize or issue shares of any class or
series of stock having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of the Series A
or Series D Preferred, or authorize or issue any bonds, debentures, notes or
other obligations convertible into or exchangeable for, or having option rights
to purchase, any shares of stock of this Corporation other than Common Stock,
(iv) reclassify any shares of Common Stock and any
other shares of this Corporation other than the Series A or Series D Preferred
into shares having any preference or priority as to dividends or assets
superior to or on a parity with any such preference or priority of the Series A
or Series D Preferred, or
(v) authorize or approve any merger or
consolidation with or into any other corporation or any sale of all or
substantially all of the assets of the Corporation or any reorganization of the
Corporation;
(b) except as required by law, no person shall be
recognized by the Corporation as holding any shares upon any trust, and the
Corporation shall not be bound by or recognize any equitable, contingent,
future or partial interest in any shares or any interest in any fractional part
of a share, or (except only as by this Certificate otherwise expressly provided
or as by statute required or under an order of a court) any other right in
respect of any share, except an absolute right to the entirety thereof in the
registered holder.
7. Residual Rights. All rights accruing to the outstanding
shares of this Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock and the Series A Preferred.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting
and before voting begins or unless the Bylaws of the
Corporation shall so provide.
SEVENTH: The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws
of the Corporation.
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EIGHTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to
make, alter, amend or repeal the Bylaws of the Corporation;
provided, however, that prior to the earlier to occur of the
closing of a firm commitment underwritten public offering
registered under the Securities Act of 1933, as amended, or
such time as the Corporation is required to file reports
pursuant to Sections 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, Sections 9.3 through 9.12 of the
Corporation's Bylaws may only be amended by the approval of
the holders of seventy-five percent (75%) of the stock
entitled to vote.
NINTH: To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be
amended, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
Neither any amendment nor repeal of this Article, nor the
adoption of any provision of this Certificate of Incorporation
inconsistent with this Article, shall eliminate or reduce the
effect of this Article in respect of any matter occurring, or
any cause of action, suit or claim that, but for this Article,
would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
TENTH: Meetings of stockholders may be held within or without the
State of Delaware, as the Bylaws may provide. The books of
the Corporation may be kept (subject to any provision
contained in the statutes) outside of the State of Delaware at
such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
ELEVENTH: Upon the earlier to occur of the closing of a firm commitment
underwritten public offering registered under the Securities
Act of 1933, as amended, or such time as the Corporation is
required to file reports pursuant to Sections 13 or 15(d) of
the Securities Exchange Act of 1934, as amended, 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 no action shall be taken by the
stockholders by written consent.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation."
3. The foregoing Amended and Restated Certificate of
Incorporation has been duly approved by the Board of Directors in accordance
with Sections 245 and 242 of the Delaware General Corporation Law (the "DGCL").
4. The foregoing Amended and Restated Certificate of
Incorporation has been duly approved by the written consent of a majority of
the stockholders in accordance with Sections 228, 245 and 242 of the DGCL, and
notice has been given to all those stockholders who have not consented in
writing in accordance with Section 228(d) of the DGCL. The total number of
outstanding shares of Common Stock and Preferred Stock of the Corporation
entitled to act by written consent upon the Amended and Restated Certificate of
Incorporation were 6,519,684, and 5,011,462, respectively. The Preferred Stock
consists
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of 2,211,462 shares of Series A Preferred Stock, 1,000,000 shares of Series B
Preferred Stock and 1,800,000 shares of Series C Preferred Stock. The number
of shares consenting to the Amended and Restated Certificate of Incorporation
equaled or exceeded consent required. The percentage consent required was more
than 75% of the outstanding Common Stock, Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock consenting as separate classes.
We hereby further declare and certify under penalty of perjury under
the laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this certificate
is our act and deed.
Executed at Larkspur, California, this 11th day of July 1991.
/s/ Paul Wilde /s/ Mark A. Bertelsen
- ------------------------ --------------------------
Paul Wilde, Mark A. Bertelsen,
Vice President Assistant Secretary
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CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
SYNON CORPORATION
(Pursuant to Section 242 of the Delaware General Corporation Law)
Paul Wilde and Mark A. Bertelsen hereby certify that:
1. They are the Vice President and Assistant Secretary of Synon
Corporation, a Delaware corporation.
2. The Amended and Restated Certificate of Incorporation filed
with the Secretary of State of Delaware on July 16, 1991 is hereby amended as
follows:
I. The second paragraph of the Fourth Article is hereby
amended in its entirety to read as follows:
"The Preferred Stock may be issued from time to time
in one or more series. A portion of the Preferred
Stock shall initially be designated as two series,
namely, Series A Preferred Stock (the "Series A
Preferred"), consisting of 2,687,750 shares, and
Series D Preferred Stock (the "Series D Preferred"),
consisting of 3,618,269 shares. The Board of
Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price
or prices, and liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of
shares constituting any such series and the
designation thereof, or any of them."
(Changes underlined.)
II. Clause 5(b)(iv) of the Fourth Article is hereby
amended in its entirety to read as follows:
"(iv) any shares of Series D Preferred Stock or
133,130 shares of Series A Preferred Stock to be
issued to the related entities of TA Associates
("TA") in exchange for a like number of shares of
Common Stock held by TA;
(Changes underlined.)
3. The foregoing Certificate of Amendment of Amended and Restated
Certificate of Incorporation (the "Amendment") has been duly approved by the
Board of Directors in accordance with Section 242 of the Delaware General
Corporation Law (the "DGCL").
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4. The foregoing Amendment has been duly approved by the written
consent of a majority of the stockholders in accordance with Sections 228 and
242 of the DGCL, and notice has been given to all those stockholders who have
not consented in writing in accordance with Section 228(d) of the DGCL. The
total number of outstanding shares of Common Stock and Preferred Stock of the
Corporation entitled to act by written consent upon the Amendment were
6,519,684, and 5,814,680, respectively. The Preferred Stock consists of
2,554,620 shares of Series A Preferred Stock and 3,260,060 shares of Series D
Preferred Stock. The number of shares consenting to the Amendment equaled or
exceeded consent required. The percentage consent required was more than 75%
of the outstanding Common Stock, Series A Preferred Stock and Series D
Preferred Stock consenting as separate classes.
We hereby further declare and certify under penalty of perjury under
the laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this Certificate
is our act and deed.
Executed at Larkspur, California, this 29th day of August 1991
/s/ Paul Wilde /s/ Mark A. Bertelsen
- ------------------------ --------------------------
Paul Wilde, Mark A. Bertelsen,
Vice President Assistant Secretary
11
CERTIFICATE OF AMENDMENT
to the
CERTIFICATE OF INCORPORATION
of
SYNON CORPORATION
SYNON CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST: That the Board of Directors of the corporation, by the
unanimous written consent of its members, filed with the minutes of the board,
duly adopted resolutions setting forth a proposed amendment to the Certificate
of Incorporation of said Corporation, declaring said amendment to be advisable
and calling for the consideration of said amendment by the stockholders of said
Corporation. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by changing Article FOURTH thereof so that, as amended, said Article
shall be and read in its entirety an follows:
The Corporation is authorized to issue two classes of capital stock:
Preferred Stock, $0.001 par value per share ("Preferred Stock"), and Common
Stock, $0.001 par value per share ("Common Stock"). The total number of shares
of Preferred Stock which the Corporation shall have the authority to issue is
8,972,686 of which 3,687,750 shall be designated Series A Preferred Stock
("Series A Preferred"), 3,618,269 shall be designated series D Preferred Stock
("Series D Preferred") and 1,666,667 shall be designated Series E Preferred
Stock ("Series E Preferred"). The total number of shares or Common Stock which
the Corporation shall have the authority to issue is 25,000,000.
The Board of Directors is hereby authorized to fix or alter the
dividend rights, dividend rate, conversion rights, voting rights and
liquidation preferences of any wholly unissued series of Preferred Stock (to
the extent such terms of the series do not impair any term accorded to any
outstanding series of Preferred Stock), and the number of shares constituting
any such series and the designation thereof, or any of them to the extent such
terms are otherwise consistent with the other provisions hereof. No such
series or
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alteration may be authorized which (i) impairs any right, privilege, preference
or term accorded any existing series of Preferred Stock, (ii) grants any
liquidation preference on parity with or superior to the Series E Preferred
stock, (iii) initially authorizes any series with voting rights or dividend
preferences greater than that accorded one share of Common Stock or otherwise
provides for disproportionate voting privileges, (iv) authorizes the redemption
of such series or is entered into with any contract requiring the repurchase of
such series (or part thereof) or (v) is initially convertible into more than
one share of Common Stock or otherwise provides for disproportionate conversion
privileges.
The Board of Directors is further authorized to increase or decrease
(but not below the number of shares thereof then outstanding) the number of
shares of any series (other than any existing series), the number of which was
fixed by it, subsequent to the issuance of shares at such series then
outstanding, subject to the limitations and restrictions stated in the
Certificate of Incorporation or the resolution of the Board of Directors
originally fixing the number of shares of such series. If the number of shares
of any series is so decreased, then the shares constituting such decrease shall
resume the status which they had prior to the adoption of the resolution
originally fixing the number of shares of such series.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance shall not be sufficient to permit conversion or the Series A
Preferred, Series D Preferred and Series E Preferred.
The relative rights, preferences, privileges and restrictions granted
to or imposed upon the respective classes of shares of capital stock or holders
thereof are as set forth below.
Section 1. Banking. Except as otherwise expressly provided in this
Article Fourth the Series A Preferred, the Series D Preferred and the Series E
Preferred shall rank pari passu with the Preferred Stock of each other such
series and shall rank prior to the Common Stock and, subject to the rights of
any other series of Preferred Stock which may
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from time to time come into existence in accordance with the terms hereof, to
any other equity securities of the Corporation.
Section 2. Dividends. The holders of Series A Preferred, Series D
Preferred, Series E Preferred and Common Stock shall be entitled to receive
dividends on a pari passu basis when and an declared by the Board of Directors,
out of funds legally available therefore. Such dividends shall not be
cumulative and no right to such dividends shall accrue to holders of the
Preferred Stock and Common Stock except as declared by the Board of Directors.
Section 3. Liquidation. Upon the liquidation, dissolution or
winding-up of the Corporation, (i) the shares of Series E Preferred shall rank
prior to the shares of Common Stock and of any other series of Preferred Stock
or other class or series of capital stock of the Corporation, (ii) the series
D Preferred shall rank junior to the Series E Preferred, but prior to any other
such class or series and (iii) the Series A Preferred shall rank junior to the
Series D Preferred and Series E Preferred but prior to any other such class or
series so that in the event of any liquidation, dissolution or winding-up of
the Corporation (a "Liquidation Transaction"), whether voluntary or
involuntary:
(a) The holders of shares of Series E Preferred shall be
entitled to receive out of the assets of the Corporation available for
distribution to its stockholders, whether from capital, surplus or earnings,
before any distribution is made to holders of shares of Common Stock or any
other series of Preferred Stock or other class or series of capital stock, an
amount per share equal to $3.00 per share for each outstanding share of Series
E Preferred (the "Original Series E Issue Price"), plus an amount equal to all
declared and unpaid dividends (such sum being referred to as the "Liquidation
Preference" for the Series E Preferred). In the event the assets of the
Corporation are insufficient to pay such Liquidation Preference in full, the
assets shall be distributed pro rata among the holders of the Series E
Preferred based on the number of shares of stock owned by each holder.
(b) After payment of the full amount of the Liquidation
Preference for the Series E Preferred has been made to the holders of such
shares, the holders of shares of Series D Preferred shall be entitled to
receive out of the assets of the Corporation
14
available for distribution to its stockholders, whether from capital, surplus
or earnings, before any distribution is made to holders of Common Stock or any
other series of Preferred Stock or other class or series of capital stock, an
amount per share of Series D Preferred equal to $3.35 for each outstanding
share of Series D Preferred (the "Original Series E Issue Price") plus an
amount equal to all declared and unpaid dividends (such sum being referred to
as the "Liquidation Preference" for the Series D Preferred). In the event the
assets of the Corporation are insufficient to pay such Liquidation Preference
in full, the assets shall be distributed pro rata among the holders of the
Series D Preferred based on the number of shares of stock owned by each holder.
(c) After payment of the full amount of their respective
Liquidation Preferences has been made to the holders of the Series D Preferred
and Series E Preferred, the holders of shares of Series A Preferred shall be
entitled to receive out of the assets of the Corporation legally available for
distribution to stockholders, before any distribution is made to holders of
shares of Common Stock or other class or series of capital stock, an amount per
share equal to $8.503194 for each outstanding share of Series A Preferred (the
"Original Series A Issue Price") plus an amount equal to all declared and
unpaid dividends an such shares (such sum being referred to as the "Liquidation
Preference" for the Series A Preferred). In the event the assets of the
Corporation are insufficient to pay such Liquidation Preference in full, the
assets shall be distributed pro rata among the holders of the Series A
Preferred based on the number of shares of stock owned by each holder.
(d) After payment of the full amount of the Liquidation
Preference for the Series A Preferred, the holders of the Series D Preferred
and the Common Stock shall each be entitled to receive an amount per share
equal to the Original Series E Issue Price plus, in the case of the Common
Stock, an amount equal to all declared and unpaid dividends on such shares. In
the event that assets are not available to distribute the full amounts per
share to be distributed pursuant to this Section 3(d), available assets shall
be distributed with respect to the Series D Preferred and the Common Stock pro
rata, based upon the number of shares of Common Stock into which the Series D
Preferred would then be convertible.
15
(e) After payment of the full amount to be distributed
pursuant to Section 3(d), the holders of the Series D Preferred, Series E
Preferred and the Common Stock shall each be entitled to receive an amount per
share equal to $5.50 for each outstanding share. In the event that assets are
not available to distribute the full amounts per share to be distributed
pursuant to this Section 3(e), available assets shall be distributed with
respect to the Series D Preferred, Series E Preferred and the Common Stock pro
rata, based upon the number of shares of Common Stock into which the Series D
Preferred and the Series E Preferred would then be convertible.
(f) After payment of the full amount to be distributed
pursuant to Section 3(e), the remaining assets of the Corporation legally
available for distribution to stockholders shall be distributed to holders of
Series A Preferred, Series D Preferred, Series E Preferred and Common Stock pro
rata, based upon the number of shares of Common Stock into which the Preferred
Stock of the applicable Series would then be convertible.
(g) Each holder of an outstanding share of Preferred
Stock shall be deemed to have consented, for all purposes, to distributions
made by the Corporation in connection with the repurchase of shares of Common
Stock issued to or hold by employees or consultants upon termination or their
employment or services in an amount not in excess of the consideration paid for
such shares of Common Stock pursuant to agreements providing for the right of
said repurchase between the Corporation and such persons.
Section 4. Voting. (a) The holders of shares of Series A Preferred,
Series D Preferred and Series E Preferred shall have the right to vote,
together with the holders of all the outstanding shares of Common Stock and not
by classes (except as otherwise provided in this Section 4 or by applicable
law), for the election of directors of the Corporation and an all other matters
on which holders of shares of Common Stock have the right to vote. Each holder
of shares of Series A Preferred, Series D Preferred and Series E Preferred
shall have the right, for the shares of Series A Preferred, Series D Preferred
and Series E Preferred held by such holder an the applicable record date, to
cast that number of votes on each such matter equal to the number of shares of
Common Stock into which such shares of Preferred Stock of any and all series
owned of record by such holder might be converted as of such record date, with
any fractions rounded down to the next
16
full vote, multiplied by the number of votes per share which the holders at
shares of Common Stock then have with respect to such matter.
(b) Notwithstanding anything to the contrary contained in
the Certificate of Incorporation (as amended) or By-laws of the Corporation,
the consent of holders of at least a majority of the outstanding shares of
Series E Preferred shall be required before the Corporation shall take action
an any matter which would require a vote of such Series to the full extent
required or permitted under Delaware law, including without limitation any
alteration of the powers, preferences, par value, special rights or any
increase in the number of shares of such Series.
Section 5. Conversion. (a) General. (i) On the terms and subject to
the conditions of this Section 5, the holder of a share of Series A Preferred,
Series D Preferred or Series E Preferred shall have the right, at its option,
at any time to convert such share into that number of shares of fully paid and
nonassessable Common Stock (calculated as to each conversion to the nearest
1/100th of a share) obtained by dividing the Original Series A Issue Price,
Original Series D Issue Price or Original Series E Issue Price, as the case may
be, by the Conversion Price for such series (as defined in Section 5(d)) and by
surrender of such share pursuant to Section 5(b) (the shares of Common Stock
issuable upon such conversion together with the shares of Common Stock issuable
upon a conversion of shares of Series D Preferred pursuant to Section 5(a) (ii)
and the shares of Common Stock issuable upon automatic conversion of shares of
Series A Preferred, Series D Preferred and Series E Preferred pursuant to the
provisions of Sections 5(a)(iii) and 5(a)(iv) being called "Conversion
Shares").
(ii) On the terms and subject to the conditions of
this Section 5, the holder of a share of Series D Preferred shall have the
right, at its option, only upon the sale, merger or liquidation of the
Corporation, or upon the consummation of an Initial Public Offering (defined
below) of the Corporation's Common Stock, to convert such share into (A) that
number of shares of fully paid and nonassessable Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) obtained by dividing $3.35
by the Series D Conversion Price plus (B) the amount at $3.35 in cash out of
assets of the Corporation legally available for payment to shareholders or at
the election of the
17
Corporation equity securities of the Corporation with an agreed-upon or
appraised market value of $3.35 (such cash or securities equivalent to $3.35
referred to herein as the "Series D Conversion Consideration"). In the event
the Corporation elects to issue securities with an appraised market value of
$3.35, such appraisal shall be made by an independent, nationally recognized
investment banking firm selected by the Corporation and the holders of a
plurality of the shares of Series D Preferred being converted; provided that if
such parties cannot agree on the selection of an investment banker, the
Corporation and the holders of a plurality of the shares of Series D Preferred
being converted shall each select one nationally recognized investment banking
firm, and the firms thus selected shall jointly select a third nationally
recognized investment banking firm which shall determine such fair market
value.
(iii) Each share of Series A Preferred shall
automatically be converted into Common Stock and each share of Series D
Preferred shall automatically be converted into Common Stock, using the
applicable Conversion Price, upon the closing of a public offering on an
underwritten firm commitment basis pursuant to a registration statement filed
and declared effective by the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), covering the
offer and sale by the Company of Common Stock at a per share price (as adjusted
for recapitalizations, stock splits, stock dividends and the like) of at least
$5 per share, which public offering results in gross cash proceeds to the
Company of at least $10 million dollars (the "Initial Public Offering"). In the
event of the automatic conversion of the Series A Preferred and the Series D
Preferred upon an Initial Public Offering as aforesaid, the person(s) entitled
to receive the Common Stock and, in the case of holders of Series D Preferred,
the Series D Conversion Consideration issuable upon such conversion of
Preferred Stock, shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
(iv) Each share of Series E Preferred shall
automatically be converted into Common Stock, using the Series E Conversion
Price, upon the Company's Initial Public Offering. In the event of the
automatic conversion of the Series E Preferred upon an Initial Public Offering
as aforesaid, the person(s) entitled to receive the Common Stock
18
shall not be deemed to have converted such Preferred Stock until immediately
prior to the closing of such sale of securities.
(b) Conversion Procedures. in order to exercise the
conversion privilege under Sections 5(a)(i) and (ii), the holder of any shares
of Preferred Stock of any series to be converted shall surrender the
certificate representing such shares at the principal office of the
Corporation, with a written notice stating that such holder elects to convert
all or a specified whole number of such shares pursuant to this Section 5 and
specifying the name or names in which such holder wishes the certificate or
certificates for Conversion Shares, and, in the case of Series D Preferred
Stock, certificates representing the Series D Conversion Consideration, to be
issued. Unless the conversion Shares (and, if applicable, securities
representing the Series D Conversion Consideration) are to be issued in the
same name as the name in which such shares if Preferred Stock are registered,
the certificate representing the shares surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or its duly authorized attorney. In
the event or an automatic conversion pursuant to Section 5(a)(iii) or 5(a)(iv),
the outstanding shares of Series A 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 Corporation or its transfer agent, provided that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless the
certificates evidencing such shares of Preferred Stock are either delivered to
the Corporation or its transfer agent, or the holder notifies the Corporation
or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificates. As promptly as practicable after such surrender of a certificate
for shares of Preferred Stock of any series to be converted, and in any event
within five business days (as defined below) thereafter, the Corporation shall
issue and deliver at such office to such holder, or on such holder's written
order, (i) a certificate or certificates for the applicable number of full
Conversion Shares, (ii) if
19
less than the full number of shares of Preferred Stock evidenced by the
surrendered certificate is being converted, a new certificate, of like tenor,
for the number of shares of Preferred Stock of the applicable series evidenced
by such surrendered certificate less the number of shares being converted and
(iii) the cash payment in settlement of any fractional Conversion Share
provided for in Section 5(c). Upon conversion of any shares of Preferred Stock,
the holder thereof shall be entitled to receive an amount equal to all declared
and unpaid dividends an such shares. A "business day" is a day other than a
Saturday, Sunday or legal holiday in the State or New York or the State of
California, on which banks are open for business in New York, New York and San
Francisco, California.
In the case of (x) the exercise of the conversion privilege under
5(a)(i) and 5(a)(ii), each conversion shall be deemed to have been effected
(subject, in the case of the Series D Preferred, to Section 5(a)(ii)) as of the
close of business on the date on which the certificate for shares of Preferred
Stock to be converted is surrendered and such notice is received by the
Corporation as aforesaid and (y) automatic conversion pursuant to Sections
5(a)(ii) or 5(a)(iv) the Conversion shall be deemed to have been effected as of
immediately prior to the closing of the Initial Public Offering, and the person
or persons in whose name or names any certificate or certificates for
Conversion Shares (and, if applicable, securities representing Series D
Conversion Consideration) are issuable shall be deemed to have become the
holder or holders of record of such Conversion Shares (and, if applicable,
securities representing Series D Conversion Consideration) at such time on such
date and, in the case of the Series A Preferred and Series E Preferred, such
conversion shall be at the applicable Conversion Price in effect at such time
on such date, unless the stock transfer books of the Corporation are closed an
that date, in which event such person or persons shall be deemed to have become
such holder or holders of record at the close of business an the next day on
which such stock transfer books are open (provided that if such books shall
remain closed for five days, such fifth day shall be the date any such person
shall become such a holder), but such conversion shall be at the Conversion
Price in effect on the date on which such certificate was surrendered and such
notice was received. Upon delivery, all Conversion Shares shall be duly
authorized,
20
validly issued, fully paid, nonassessable, free of all liens and charges and
not subject to any preemptive or subscription rights.
(c) Settlement of Fractional Conversion Shares. No
fractional Conversion Shares or scrip representing fractions of Conversion
Shares shall be issued upon conversion of shares of Preferred Stock of any
series. Instead of any fractional Conversion Share otherwise deliverable, the
Corporation shall pay to the holder of the converted shares an amount in cash
equal to the current market price (as defined below) at such fractional
Conversion Share on the date of conversion. If more than one share in
surrendered for conversion at one time by the same holder, the number of full
Conversion Shares shall be computed an the basis of the aggregate number of
shares so surrendered. The "current market price" per share of Common Stock on
any day is the average of the daily market prices for the 30 consecutive
trading days immediately prior to the day in question. The "daily market
price" of a share of Common Stock is the price of a share of Common Stock on
the relevant day, determined on the basis of the last reported sale price,
regular way, of the Common Stock as reported on the composite tape, or similar
reporting system, for issues listed or admitted to trading on the New York
Stock Exchange (or if the Common Stock is not then listed or admitted to
trading on the New York Stock Exchange, on the principal national securities
exchange on which the Common Stock is then listed or admitted to trading) or on
the National Association of Securities Dealers Automated Quotation System
National Market System or, if there is no such reported sale on the day in
question, on the basis of the average of the closing bid and asked quotations
as so reported or, it the Common Stock is not then listed or admitted to
trading on any national securities exchange or on the National Association of
Securities Dealers Automated Quotation System National Market System, on the
basis of the average of the high bid and low asked quotations on the day in
question in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System, or, if not so quoted, as
reported by National Quotation Bureau, Incorporated, or a similar organization.
If the current market price is not determinable as aforesaid, it shall be
determined in good faith by the Board and evidence of such determination shall
be filed with the minutes of the Corporation. A "trading day" is a day on
which the principal national securities
21
exchange on which the Common Stock is listed or admitted to trading is open for
the transaction of business or, if the Common Stock is not then listed or
admitted to trading on any national securities exchange, any day other than
Saturday, Sunday or a federal holiday.
(d) The "Series A Conversion Price" shall mean $8.503194,
the "Series D Conversion Price" shall mean $3.35 and the "Series E Conversion
Price" shall mean $3.00, in each case as adjusted pursuant to this Section
5(d). "Conversion Price" shall generally mean the Series A Conversion Price,
the Series D Conversion Price or the Series E Conversion Price, as applicable.
The Series A Conversion Price, the Series D Conversion Price and the Series E
Conversion Price (and the kind and amount of consideration receivable by
holders of shares of Series A Preferred, Series D Preferred or Series E
Preferred upon conversion) shall be adjusted from time to time as follows:
(i) If after the date of issuance of the Series E
Preferred the Corporation (A) pays a dividend or makes a distribution on the
Common Stock in shares of Common Stock, (B) subdivides or combines its
outstanding shares of Common Stock into a greater or smaller number of shares
or (C) issues by reclassification of the Common Stock any shares of capital
stock of the Corporation, each Conversion Price in effect immediately prior to
such action shall be adjusted so that the holder of any share of Series A
Preferred, Series D Preferred or Series E Preferred thereafter surrendered for
conversion shall be entitled to receive, at the time of such conversion, the
number of shares of Common Stock or other capital stock of the Corporation that
it would have owned or been entitled to receive immediately following such
action had such share been converted immediately prior to such action or the
record date therefor, whichever is earlier. Such adjustment shall become
effective immediately after the record date, in the case of a dividend or
distribution, or immediately after the effective date, in the case of a
subdivision, combination or reclassification.
(ii) If the corporation issues any Additional
Shares (as defined below) for a consideration per share less than the Series E
Conversion Price in effect immediately prior to such issuance, then (A) if the
date of issuance of such Additional Shares is before 18 months after the date
of issuance of the Series E Preferred, the
22
Series E Conversion Price shall be adjusted to equal the consideration per
share for which such Additional Shares are issued, and (B) if the date of
issuance of such Additional Shares is on or after 18 months after the date of
issuance of the Series E Preferred, the Series E Conversion Price shall be
adjusted by multiplying the Series E Conversion Price in effect immediately
prior to such issuance by a fraction (I) the numerator of which shall be the
number of shares of Common Stock and Share Equivalents outstanding immediately
prior to the issuance of such Additional Shares plus the number of shares of
Common Stock that the aggregate consideration for such Additional Shares would
purchase at a consideration per share equal to such Conversion Price and (II)
the denominator of which shall be the number of shares of Common Stock and
Share Equivalents outstanding immediately prior to the issuance of such
Additional Shares plus the number of Additional Shares so issued. Such
adjustment for the Series E Preferred shall become effective immediately after
the issuance of such Additional Shares but prior to any adjustment for such
Additional Shares to the Series D Conversion Price. For the purpose of this
Section 5 the reissuance or resale of any Additional Shares or other Rights (as
defined below) or Convertible Securities (as defined below) shall also result
in an adjustment to the Series E Conversion Price to the extent an appropriate
adjustment under Section 5(d)(vii) has been made.
"Additional Shares" shall mean any shares of Common Stock of the
Corporation issued by the Corporation after the date of issuance of the Series
E Preferred excluding Permitted Issuances. "Share Equivalents" shall mean the
Common Stock deliverable upon conversion or exercise of all outstanding
Preferred Stock, convertible securities, optional warrants and rights of the
Corporation as of the date such computation is made and as of the time such
computation is effective as specified herein.
"Permitted Issuances" shall mean (i) any employee stock options which
have been granted and remain unexercised as of the date of issuance of the
Series E Preferred, (ii) employee stock options granted and shares issued to
employees and consultants after the issuance at the Series E Preferred in the
aggregate amount of 585,750 shares of Common Stock pursuant to the Corporation's
stock plans, (iii) additional employee options granted and shares issued in an
amount equal to options granted and shares issued pursuant to the
23
foregoing clauses (i) and (ii) to the extent such shares are returned to the
Corporation's stock plans upon the lapse of unexercised stock options or the
repurchase (at original purchase price) of unvested shares (iv) any shares
issued upon exercise of options granted pursuant to the foregoing clauses
(i)-(iii), provided that the total of all such options outstanding, shares
issued upon exercise of such options and shares sold pursuant to clauses (i)
through (iv) shall never exceed 2,920,763, (v) any shares issued upon
conversion of the Series A Preferred, Series D Preferred and Series E Preferred
(including adjustments to the conversion ratio) and (vi) any other stock
options granted and shares issued upon the exercise thereof approved by the
holders of a majority or the Series E Preferred, which approval shall not be
unreasonably withheld, and any shares issued to the holders of the Series E
Preferred in connection with any contractual rights, related to such approved
shares or options.
(iii) If after the date of issuance of the Series E
Preferred the Corporation issues any warrants, options or other rights
entitling the holders thereof to subscribe for or purchase either any
Additional Shares or evidences of debts, shares of capital stock or other
securities that are convertible into or exchangeable for, with or without
payment of additional consideration, Additional Shares (such warrants, options
or other rights being called "Rights" and such convertible or exchangeable
evidences of debt shares of capital stock or other securities being called
"Convertible Securities"), and the consideration per share for which Additional
Shares may at any time thereafter be issuable pursuant to such Rights or
Convertible Securities (when added to the consideration per share of Common
Stock, if any, received for such Rights) is less than the Series E Conversion
Price, the Series E Conversion Price shall be adjusted as provided in Section
5(d)(ii) on the basis that (A) the maximum number of Additional Shares issuable
pursuant to all such Rights or necessary to effect the conversion or exchange
of all such Convertible Securities shall be deemed to have been issued and (B)
the aggregate consideration (plus the consideration, if any, received for such
Rights) for such maximum number of Additional Shares shall be deemed to be the
consideration received and receivable by the Corporation for the issuance of
such Additional Shares pursuant to such Rights or Convertible Securities.
24
(iv) If after the date of issuance of the Series E
Preferred the Corporation issues Convertible Securities and the consideration
per share for which Additional Shares may at any time thereafter be issuable
pursuant to such Convertible Securities is less than the Series E Conversion
Price, the Series E Conversion Price shall be adjusted as provided in Section
5(d)(ii) on the basis that (A) the maximum number of Additional Shares
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and (B) the aggregate
consideration for such maximum number of Additional Shares shall be deemed to
be the consideration received and receivable by the Corporation for the
issuance of such Additional Shares pursuant to such Convertible Securities. No
adjustment of the Series E Conversion Price shall be made under this Section
5(d)(iv) upon the issuance or any Convertible Securities issued pursuant to the
exercise of any Rights, to the extent that such adjustment was previously made
upon the issuance of such Rights pursuant to Section 5(d)(iii).
(v) For purposes of Sections 5(d)(iii) and
5(d)(iv), the relevant Series E Conversion Price shall be the Series E
Conversion Price in effect immediately prior to the earlier of (A) the record
date for the holders of Common Stock entitled to receive the Rights or
Convertible Securities and (B) the initial issuance of the Rights or
Convertible Securities, and the adjustment provided for in either such Section
shall become effective immediately after the earlier of the times specified in
clauses (A) and B).
(vi) No adjustment of the Series E Conversion
Price shall be made under Section 5(d)(ii) upon the issuance of any Additional
Shares pursuant to the exercise of any Rights or of any conversion or exchange
rights pursuant to any Convertible Securities, if such adjustment was
previously made in connection with the issuance of such Rights or Convertible
Securities (or in connection with the issuance of any Riqhts therefor) pursuant
to Section 5(d)(iii) or 5(d)(iv).
(vii) If any Rights (or any portions thereof) that
gave rise to an adjustment pursuant to Section 5(d)(iii) or any conversion or
exchange rights pursuant to any Convertible Securities that gave rise to an
adjustment pursuant to Section 5(d)(iii) or 5(d)(iv) expire or terminate
without the exercise thereof and/or if by reason of the
25
provisions of such Rights or Convertible Securities there has been any
increase, with the passage of time or otherwise, in the consideration payable
upon the exercise thereof, the Series E Conversion Price shall be readjusted
(but to no greater extent than originally adjusted) on the basis of (A)
eliminating from the computation Additional Shares corresponding to such
expired or terminated Rights or conversion or exchange rights, (B) treating the
Additional Shares, if any actually issued or issuable pursuant to the previous
exercise of such Rights or conversion or exchange rights as having been issued
for the consideration actually received and receivable therefor and (C)
treating any such Rights or conversion or exchange rights that remain
outstanding as being subject to exercise on the basis of the consideration
payable upon the exercise or conversion thereof as is in effect at such time;
provided, however, that any consideration actually received by the Corporation
in connection with the issuance of such Rights shall form part of the
readjustment computation even though such Rights expired without being
exercised. The Series E Conversion Price shall be adjusted as provided in
Section 5(d)(ii) and any applicable provisions of Section 5(d)(iii) or 5(d)(iv)
as a result of any increase in the number of Additional Shares issuable, or any
decrease in the consideration payable upon any issuance of Additional Shares,
pursuant to any antidilution provisions of any Rights or Convertible
Securities.
(viii) If after the date of Issuance of the Series E
Preferred, the Corporation issues any Additional Shares for a consideration per
share less than the Series D Conversion Price in effect immediately prior to
such issuance, then (A) if the date of issuance of such Additional Shares is
before 18 months after the date of issuance of the Series E Preferred, the
Series D Conversion Price shall be adjusted to equal the consideration per
share for which such Additional Shares are issued, and (B) if the date of
issuance of such Additional Shares is on or after 18 months after the date of
issuance of the Series E Preferred, the Series D Conversion Price shall be
adjusted by multiplying the Series D Conversion Price in effect immediately
prior to such issuance by a fraction (I) the numerator at which shall be the
number of shares of Common Stock and Share Equivalents outstanding immediately
prior to the issuance of such Additional Shares plus the number of shares of
Common Stock that the aggregate consideration for such Additional
26
Shares would purchase at a consideration per share equal to such Conversion
Price and (II) the denominator of which shall be the number of shares of Common
Stock and Share Equivalents outstanding immediately prior to the issuance of
such Additional Shares plus the number of Additional Shares so issued. Such
adjustment for the Series D Preferred shall become effective immediately after
the issuance of such Additional Shares and the adjustment to the Series E
Conversion Price for such Additional Shares. No adjustment to the Series D
Conversion Price shall be made for the issuance of the Series E Preferred. The
reissuance or resale of any Additional Shares or other Rights or Convertible
Securities shall also result in an adjustment to the Series D Conversion Price
to the extent an appropriate adjustment under Section 5(d)(xiii) has been made.
(ix) It after the data of issuance of the Series E
Preferred the Corporation issues any Rights or Convertible Securities, and the
consideration per share for which Additional Shares may at any time thereafter
be issuable pursuant to such Rights or Convertible Securities (when added to
the consideration per share of Common Stock, if any, received for such Rights)
is less than the Series D Conversion Price, the Series D Conversion Price shall
be adjusted as provided in Section 5(d)(viii) an the basis that (A) the maximum
number of Additional Shares issuable pursuant to all such Rights or necessary
to effect the conversion or exchange of all such Convertible Securities shall
be deemed to have been issued and (B) the aggregate consideration (plus the
consideration, if any, received for such Rights) for such maximum number of
Additional Shares shall be deemed to be the consideration received and
receivable by the Corporation for the issuance of such Additional Shares
pursuant to such Rights or Convertible Securities.
(x) If after the date of issuance of the Series E Preferred the
Corporation issues Convertible Securities and the consideration per share for
which Additional Shares may at any time thereafter be issuable pursuant to such
Convertible Securities is less than the Series D Conversion Price, the Series D
Conversion Price shall be adjusted as provided in Section 5(d)(viii) on the
basis that (A) the maximum number of Additional Shares necessary to effect the
conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and (B) the aggregate consideration for such maximum number of
Additional Shares shall be deemed to be the consideration received and
receivable by the Corporation
27
for the issuance of such Additional Shares pursuant to such Convertible
Securities. No adjustment of the Series D Conversion Price shall be made under
this Section 5(d)(x) upon the issuance of any Convertible Securities issued
pursuant to the exercise of any Rights, to the extent that such adjustment was
previously made upon the issuance of such rights pursuant to Section 5(d)(ix).
(xi) For purposes of Sections 5(d)(ix) and
5(d)(x), the relevant Series D Conversion Price shall be the Series D
Conversion Price in effect immediately prior to the earlier of (A) the record
date for the holders of Common Stock entitled to receive the Rights or
Convertible Securities and (B) the initial issuance of the Rights or
Convertible Securities and the adjustment provided for in either such section
shall became effective immediately after the earlier of the times specified in
clauses (A) and (B).
(xii) No adjustment of the Series D Conversion
Price shall be made under Section 5(d)(viii) upon the issuance of any
Additional Shares pursuant to the exercise of any Rights or of any conversion
or exchange rights pursuant to any Convertible Securities, it such adjustment
was previously made in connection with the Issuance of such Rights or
Convertible securities (or in connection with the issuance of any Rights
therefor) pursuant to Section 5(d)(ix) or 5(d)(x).
(xiii) If any Rights (or any portions, thereof) that
gave rise to an adjustment pursuant to Section 5(d)(ix) or any conversion or
exchange rights pursuant to any Convertible Securities that gave rise to an
adjustment pursuant to Section 5(d)(ix) or 5(d)(x) expire or terminate without
the exercise thereof and/or if by reason of the provisions or such Rights or
Convertible Securities there has been any increase, with the passage of time or
otherwise, in the consideration payable upon the exercise thereof, the Series D
Conversion Price shall be readjusted (but to no greater extent than originally
adjusted) on the basis of (A) eliminating from the computation Additional
Shares corresponding to such expired or terminated Rights or conversion or
exchange rights, (B) treating the Additional Shares, if any, actually issued or
issuable pursuant to the previous exercise of such Rights or conversion or
exchange rights as having been issued for the consideration actually received
and receivable therefor and (C) treating any such Rights or conversion or
exchange rights that remain outstanding as being subject to
28
exercise on the basis of the consideration payable upon the exercise or
conversion thereof as is in effect at such time; provided, however, that any
consideration actually received by the Corporation in connection with the
issuance of such Rights shall form part of the readjustment computation even
though such Rights expired without being exercised. The Series D Conversion
Price shall be adjusted as provided in Section 5(d)(viii) and any applicable
provisions of Section 5(d)(ix) or 5(d)(x) as a result of any increase in the
number of Additional Shares issuable, or any decrease in the consideration
payable upon any issuance of Additional Shares, pursuant to any antidilution
provisions of any Rights or Convertible Securities.
(xiv) (A) If any Additional Shares,
Convertible Securities or Rights are issued for cash, the consideration
received therefor shall be deemed to be the amount of cash received.
(B) If any Additional Shares,
Convertible Securities or Rights are offered by the Corporation for
subscription, the consideration received therefor shall be deemed to be the
subscription price.
(C) If any Additional Shares,
Convertible Securities or Rights are sold to underwriters or dealers for public
offering without a subscription offering, the consideration received therefor
shall be deemed to be the public offering price.
(D) In any case covered by Section
5(d)(xiv) (A), (B) or (C), in determining the amount of any consideration
received by the Corporation in whole or in part other than in cash, the amount
of such consideration shall be deemed to be the fair market value of such
consideration as determined in good faith by the Board, and evidence of such
determination shall be filed with the minutes of the Corporation. If Additional
Shares are issued as part of a unit with Rights, the consideration received for
the Rights shall be deemed to be the portion of the consideration received for
such unit determined in good faith at the time of issuance by the Board, and
evidence of such determination shall be filed with the minutes of the
Corporation. If the Board does not make any such determination, the
consideration received for the Rights shall be deemed to be zero. In either
event, the consideration received for the Additional Shares shall be deemed to
be
29
the consideration received for such unit less the consideration deemed to have
been received for the Rights.
(E) In any case covered by Section
5(d)(xiv) (A), (B), (C) or (D), in determining the amount of consideration
received by the Corporation, (I) any amounts received or receivable for accrued
interest or accrued dividends shall be excluded and (II) any compensation,
underwriting commissions or concessions or expenses paid or incurred in
connection therewith shall not be deducted.
(F) In any case covered by section
5(d)(xiv) (A),(B), (C) or (D), there shall be added to the consideration
received by the Corporation at the time of issuance or sale (I) the minimum
aggregate amount of additional consideration payable to the Corporation upon
the exercise of Rights that relate to Convertible Securities and (II) the
minimum aggregate amount of consideration payable upon the conversion or
exchange thereof.
(G) If any Additional Shares,
Convertible Securities or Rights are issued in connection with any merger,
consolidation or other reorganization in which the Corporation is the surviving
corporation, the amount of consideration received therefor shall be deemed to
be the fair market value, as determined in good faith by the Board, of such
portion of the assets and business of the non-surviving person or persons as
the Board determines in good faith to be attributable to such Additional
Shares, Convertible Securities or Rights, and evidence of such determination
shall be filed with the minutes of the Corporation.
(xv) If the Corporation effects any merger,
consolidation or other reorganization to which the Corporation is a party
(other than a merger or consolidation in which the Corporation is the surviving
corporation), any sale or conveyance to another person of all or substantially
all the assets of the Corporation or any statutory exchange of securities with
another person (including any exchange affected in connection with a merger of
a third person into the Corporation), the holder of each share of Series A
Preferred, Series D Preferred or Series E Preferred then outstanding shall have
the right thereafter to convert such share into the kind and amount of
consideration receivable pursuant to such transaction by a holder of the number
of shares of Common Stock into
30
which such share of Series A Preferred, Series D Preferred or Series E
Preferred might have been converted immediately prior to such transaction,
assuming such holder of Common Stock failed to exercise its rights of
elections, if any, as to the kind or amount of consideration receivable upon
such transaction (provided that if the kind or amount of consideration
receivable pursuant to such transaction is not the same for each share of
Common Stock in respect of which such rights of election shall not have been
exercised ("non-electing share') then, for purposes of this Section 5(d)(xv),
the kind and amount of consideration receivable pursuant to such transaction
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Thereafter,
the holders or shares of Series A Preferred, Series D Preferred and Series E
Preferred shall be entitled to appropriate adjustments with respect to their
conversion rights to the end that the provisions set forth in this Section 5
shall correspondingly be made applicable, as nearly as may reasonably be, to
any consideration thereafter deliverable on conversion of shares of Series A
Preferred, Series D Preferred and Series E Preferred. Notwithstanding the
foregoing, this Section 5(d)(xv) shall not apply with regard to the Series E
Preferred to an event which is treated as a liquidation, dissolution or
winding-up of the Corporation with respect to such series pursuant to Section
3.
(xvi) If a purchase, tender or exchange offer is
made to the holders of outstanding shares of Common Stock and, upon the
consummation of such offer, the person having made such offer (together with
its affiliates) beneficially owns 50% or more of the outstanding shares of
Common Stock, the Corporation shall not effect any merger, consolidation or
other reorganization with or sale, lease or other disposition of material
assets or issuance of securities to the person having made such offer or any
affiliate of such person, unless prior to the consummation thereof each holder
of shares of Series A Preferred, Series D Preferred and Series E Preferred
shall have been given a reasonable opportunity to elect to receive upon
conversion of the shares of Series A Preferred, Series D Preferred and Series E
Preferred then held by such holder (in lieu of the kind and amount of
consideration otherwise receivable upon conversion pursuant to the provisions
of this Section 5(d)), the consideration that would have been received pursuant
31
to such offer by a holder of that number of shares of the Common Stock into
which one share of Series A Preferred, Series D Preferred or Series E Preferred
(as applicable) might then be converted if all such shares had been tendered
and accepted pursuant to such offer.
(xvii) If the Corporation distributes generally to
holders of its outstanding shares of Common Stock or any other securities
entitled generally to participate in the earnings or assets of the Corporation
("Common Equity"), evidences of its debts, securities or other assets
(excluding any cash dividends and excluding any dividends or distributions
payable in Rights or Convertible Securities for which adjustment is otherwise
made pursuant to this Section 5(d)), the Series E Conversion Price shall be
adjusted by multiplying such Conversion Price in effect immediately prior to
the record date for such dividend or distribution by a fraction of which (X)
the numerator shall be the current market price per share of the Common Equity
(determined, if the Common Equity is not Common Stock, in the same way that the
current market price for Common Stock is determined) on such record date less
the then fair market value, as determined in good faith by the Board, of the
portion of the evidences of debt, securities or other assets so distributed or
applicable to the holder of one share of Common Equity and (Y) the denominator
shall be such current market price per share of the Common Equity, and evidence
of such determination shall be filed with the minutes of the Corporation. Such
adjustment shall become effective immediately after the record date for such
dividend or distribution but prior to any adjustment for such event to the
Series D Conversion Price pursuant to 5(d)(xviii).
(xviii) If the Corporation distributes generally to
holders of its outstanding shares of Common Stock or any other Common Equity,
evidences of its debt, securities or other assets (excluding any cash dividends
and excluding any dividends or distributions payable in Rights or Convertible
Securities for which adjustment is otherwise made pursuant to this Section
5(d)), the Series D Conversion Price shall be adjusted by multiplying such
Conversion Price in effect immediately prior to the record date for such
dividend or distribution by a fraction of which (X) the numerator shall be the
current market price per share of the Common Equity (determined, if the Common
Equity
32
is not Common Stock, in the same way that the current market price for Common
Stock is determined) on such record date less the then fair market value, as
determined in good faith by the Board, of the portion at the evidences or debt,
securities or other assets so distributed or applicable to the holder of one
share of Common Equity and (Y) the denominator shall be such current market
price per share of the Common Equity, and evidence or such determination shall
be filed with the minutes of the Corporation. Such adjustment shall became
effective immediately after the record date for such dividend or distribution
and immediately after the adjustment in Section 5(d)(xvii) has been made.
(xix) If a state of facts not specifically
controlled by the provisions of this Section 5(d) occurs or is proposed that
would result in the conversion provisions of the Series A Preferred, Series D
Preferred and Series E Preferred not being fairly protected in accordance with
the essential intent and principles of such provisions, the Board shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles so as to protect such conversion provisions,
and evidence of the Board's determination of such adjustment shall be filed
with the minutes of the Corporation.
(xx) No adjustment in any Conversion Price shall
be required to be made unless it would require an increase or decrease of at
least one cent, but any adjustments not made because of this Section 5(d)(xx)
shall be carried forward and taken into account in any subsequent adjustment
otherwise required. All calculations under this Section 5(d) shall be made to
the nearest cent or to the nearest 1/100th of a share, as the case may be. All
adjustments with respect to a transaction or event shall apply to subsequent
such transactions and events. Anything in this Section 5(d) to the contrary
notwithstanding, the Board shall be entitled (but shall not be obligated) to
make such irrevocable reduction in the Conversion Price, in addition to the
adjustments required by this Section 5(d), as in its discretion it shall
determine to be advisable in order to avoid or diminish any income deemed to be
received for Federal income tax purposes by any holder of shares of Common
Stock, Series A Preferred, Series D Preferred or Series E Preferred resulting
from any event or occurrence giving rise to an adjustment pursuant to this
33
Section 5(d) or from any similar event or occurrence and evidence of the
Board's determination of such adjustment shall be filed with the minutes of the
Corporation.
(xxi) Whenever any Conversion Price is adjusted
pursuant to this Section 5(d), (A) the Corporation shall promptly file with the
minutes of the Corporation a certificate of a firm of nationally recognized
independent public accountants or of the Corporation's chief accounting officer
setting forth such Conversion Price (and any change in the kind or amount of
consideration to be received by holders of shares of Series A Preferred, Series
D Preferred or Series E Preferred, as applicable, upon conversion) after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment and the manner of computing the same and (B) a notice stating that
such Conversion Price has been adjusted, stating the effective date of such
adjustment and enclosing such certificate shall forthwith be mailed by the
Corporation to the holders of shares of Series A Preferred, Series D Preferred
or Series E Preferred, as applicable, at their addresses as shown on the stock
books of the Corporation.
(xxii) If as a result of any adjustment pursuant to
this section 5(d), the holder of any share of Series A Preferred, Series D
Preferred or Series E Preferred surrendered for conversion becomes entitled to
receive any consideration other than Common Stock, (A) the Conversion Price
with respect to such other consideration shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to Common Stock contained in this Section 5(d) and
(B) in the case such consideration shall consist of shares at Common Stock and
some other kind of consideration or of two or more kinds of consideration, the
Board shall determine in good faith the fair allocation of the adjusted
Conversion Price between or among such types of consideration, and evidence of
such determination shall be filed with the minutes of the Corporation.
(e) Specified Events. For purposes of this Section 5(e),
a "Specified Event" shall occur if (i) the Corporation takes any action that
would require any adjustment in the Conversion Price pursuant to Section
5(d)(xvii) or 5(d)(xviii), (ii) the Corporation authorizes the granting to the
holders of the Common Stock of any Rights or of any other rights, (iii) there
is any capital stock reorganization or reclassification of
34
the Common Stock (other than a subdivision or combination of the outstanding
Common Stock and other than a change in the par value of the Common Stock), or
any merger, consolidation or other reorganization to which the Corporation is a
party, or any statutory exchange of securities with another person and for
which approval of any stockholders of the Corporation is required, or any sale
or transfer of all or substantially all the assets of the Corporation or (iv)
there is a voluntary liquidation, dissolution or winding up of the Corporation.
If a Specified Event occurs, the Corporation shall cause to be filed with the
minutes of the Corporation, and shall cause to be mailed to the holders of
shares of the Series A Preferred, Series D Preferred and Series E Preferred at
their addresses as shown on the stock books of the Corporation, at least 10
days prior to the applicable data specified below, a notice stating (A) the
date on which a record is to be taken for the purpose of any distribution or
Rights relating to such Specified Event or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
distribution or Rights are to be determined, or (B) the date on which the
reorganization, reclassification, consolidation, merger, statutory exchange,
sale, transfer, dissolution, liquidation or winding-up relating to such
Specified Event is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares at Common Stock for securities or other property deliverable upon
such Specified Event.
(f) Reservation of Common Stock. The Corporation shall at all
times reserve and keep available, free from preemptive and subscription rights,
out of its authorized but unissued shares of Common Stock, for the purpose of
effecting conversions of the Series A Preferred, Series D Preferred and Series
E Preferred, the full number of shares of Common Stock deliverable upon the
conversion of all outstanding shares of Series A Preferred, Series D Preferred
and Series E Preferred not theretofore converted. For this purpose, the number
of shares of Common Stock deliverable upon the conversion of all outstanding
shares of Series A Preferred, Series D Preferred and Series E Preferred shall
be computed as if at the time of computation all such outstanding shares were
held by a single holder.
(g) Listing. With respect to any securities required to
be delivered upon conversion of the Series A Preferred, Series D Preferred and
Series E Preferred, the
35
Corporation shall use its best efforts to list such securities prior to such
delivery upon each securities exchange, it any, on which any securities of such
class are already listed.
(h) Taxes. The Corporation shall pay all documentary
stamp or similar issue or transfer taxes payable in respect of the issue or
delivery of securities on conversion of the Series A Preferred, Series D
Preferred and Series E Preferred; provided, however, that
(i) the Corporation shall not be required to pay
any tax payable in respect of any transfer involved in the issue or delivery of
securities in a name other than that of the holder of the shares of Series A
Preferred, Series D Preferred and Series E Preferred to be converted and (ii)
no such issue or delivery shall be made unless and until such holder has paid
to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid or provided for.
Section 6. Status of Shares. Upon any conversion or any redemption,
repurchase or other acquisition by the Corporation of shares of Series A
Preferred, Series D Preferred or Series E Preferred, the shares of Series A
Preferred, Series D Preferred or Series E Preferred so converted, redeemed,
repurchased or acquired shall be retired and cancelled and shall not be
available for reissuance.
Section 7. Definitions and Construction. As used in this Article
Fourth, (a) "herein", "hereof", "hereunder" and other like words mean or refer
to this Article Fourth; (b) "outstanding", when used with reference to shares
of stock, means issued shares, excluding shares held by the Corporation or a
subsidiary; (c) "person" means any corporation, partnership, trust,
organization, association or other entity or individual, (d) "affiliate" of any
person means any other person controlling, controlled by or under common
control with such person; (e) headings are for convenience of reference only
and shall not define, limit or affect any of the provisions hereof, and (f)
references to Sections are to Sections of this Article Fourth.
36
Section 8. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for or to the contrary herein
shall be vested in the Common Stock.
FURTHER RESOLVED, that a new Article shall be added to the
Corporation's Certificate of Incorporation, as follows:
THIRTEENTH: In anticipation that International Business Machines
Corporation ("IBM") will be a substantial stockholder of the Corporation, and
in anticipation that the Corporation and such stockholder may engage in the
same or similar activities or lines of business and have an interest in the
same area of corporate opportunities, and in recognition of the benefits to be
derived by the Corporation through its continued contractual, corporate and
business relations with such stockholder, the provisions of this Article
Thirteenth are set forth to regulate and define the conduct of certain affairs
of the Corporation as they may involve such stockholder and its officers and
employees, and the powers, rights, duties and liabilities of the Corporation
and its officers, directors and stockholders in connection therewith.
SECTION 1. Freedom of Action. (a) IBM shall not have any obligation
to the Corporation not to (i) engage in the same or similar activities or lines
of business as the Corporation or develop or market any products or services
that compete, directly or indirectly with those of the Corporation, (ii) invest
or own any interest publicly or privately in, or develop a business
relationship with, any corporation, partnership or other entity engaged in the
same or similar activities or lines of business as, or otherwise in competition
with, the Corporation or (iii) do business with any client or customer of the
Corporation. Neither IBM nor any of its officers, directors, employees or
former employees shall have any obligation, or be liable, to the Corporation
for or arising out of the conduct described in (i), (ii) or (iii) above, for
exercising or failing to exercise its rights under any agreement with the
Corporation, for exercising, or failing to exercise its rights as a stockholder
of the Corporation or for breach of any fiduciary or other duty to the
Corporation by reason of such conduct or such officers',
37
directors', employee's or former employees' participation therein or actions as
directors of the Corporation.
SECTION 2. Corporate Opportunities. In the event that IBM or any
officer, director, employee or former employee of IBM acquires knowledge of a
potential transaction or matter which may be a corporate opportunity for both
IBM and the Corporation, neither IBM nor its officers, directors, employees or
former employees shall have any duty to communicate or offer such corporate
opportunity to the Corporation and neither IBM nor its officers directors,
employees or former employees shall be liable to the Corporation or its
stockholders for breach of any fiduciary or other duty, as a stockholder or
otherwise, by reason of the fact that IBM pursues or acquires such corporate
opportunity for itself, directs such corporate opportunity to another person or
entity, or does not communicate such corporate opportunity or information
regarding such corporate opportunity to the Corporation.
SECTION 3. Scope of Article. The provisions of this Article Thirteenth
shall be effective to the maximum extent permitted by law.
SECTION 4. Definitions. As used in this article THIRTEENTH, IBM shall
mean IBM and its affiliates (but not including the Corporation as an affiliate
of IBM).
As used in this Article, "affiliate" shall have the same meaning as
defined in Section 7 of Article FOURTH of the Certificate of Incorporation, as
amended.
FURTHER RESOLVED, that a new Article shall be added to the
Corporation's Certificate of Incorporation, as follows:
FOURTEENTH: The following matters, which relate to actions that
can only be taken by the Corporation with the approval of the Board of
Directors, shall be authorized only as follows:
SECTION 1. Matters Requiring Board Approval by Simple Majority
Director Vote. The following matters shall require a Simple Majority Director
Vote:
(a) the incurring by the Corporation or any subsidiary of
any form of debt or other borrowing, which is payable not earlier than nine
months from the date such debt or other borrowing was incurred by the
Corporation or any such subsidiary, with an aggregate principal amount in
excess of $1,621,000;
38
(b) the issuance by the Corporation or any subsidiary of
any shares of the capital stock of the Corporation or any such subsidiary or
the grant of any options by the Corporation or any subsidiary of any shares at
the capital stock of the Corporation or any such subsidiary;
(c) the declaration of any dividend by the Corporation;
and
(d) decisions with respect to the selection, termination,
and employment terms (including the grant of any stock options) of the Chief
Executive Officer and all senior executives of the Corporation who report
directly to the Chief Executive Officer (or until the appointment of a Chief
Executive Officer, the President).
SECTION 2. Matters Requiring Board Approval by Supermajority Director
Vote. The following matters shall require a Supermajority Director Vote.
(a) appointment or removal of the Chief Executive Officer
of the Corporation:
(b) decisions with respect to new lines of business and
acquisitions involving the Corporation or any subsidiary;
(c) the sale, lease or other disposition of assets of the
Corporation or any subsidiary outside the ordinary course of business;
(d) a corporate reorganization, or the merger or
consolidation of the Corporation with or into any other corporation or
corporations, which would result in the holders of Voting Securities
immediately prior thereto beneficially owning less than 80% of the Total Voting
Power of the resulting or surviving corporation immediately thereafter (a
"Significant Merger"), or any liquidation or dissolution of the Corporation;
(e) changes in accounting methods or policies and any
change in the Corporation's auditors; or
(f) any amendment to the Certificate of Incorporation or
By-laws of the Corporation.
SECTION 3. Certain Matters Requiring Shareholder Vote. Without the
affirmative approval of each of the holders at a majority of the shares of each
of the (i) Common Stock, (ii) Series A Preferred and Series D Preferred voting
together as a group, and (iii) Series E Preferred, the Corporation will not (i)
consummate a Significant Merger or
39
(ii) sell all or substantially all of the Corporation's assets. Unless
pursuant to a vote by each of the holders of a majority of the shares of each
of the (i) Common Stock, (ii) Series A Preferred and the Series D Preferred
voting together as a group and (iii) the Series E Preferred, a Significant
Merger or sale of all or substantially all of the assets of the Corporation
shall not be treated as a Liquidation Transaction (as such term is defined in
Article IV, Section 3).
SECTION 4. Definitions.
(a) "Simple Majority Director Vote" means the affirmative
vote of a majority of the members of the entire Board of Directors.
(b) "Supermajority Director Vote" means the affirmative
vote of 2/3rds of the members of the entire Board of Directors.
(c) "Total Voting Power of the Corporation" means the
total number of votes that may be cast in the election of directors of the
Corporation at any meeting of shareholders of the Corporation if all Voting
Securities (assuming full conversion, exchange or exercise of all securities,
including rights, warrants and options convertible into, exchangeable for or
exercisable for any securities of the Corporation) entitled to vote generally
in the election of directors of the Corporation were present and voted at such
meeting, other than votes that may be cast only by one class or series of
shares (other than Common Stock) or upon the happening of a contingency. For
the purpose of the application of this definition, any prohibition or
restriction on voting any shares of stock as a result of any shareholders
agreement shall not be given effect.
(d) "Voting Securities" means the shares of Common Stock
and any other securities of the Corporation entitled to vote generally in the
election of directors of the Corporation, and any other securities (including
rights, warrants and options) convertible into, exchangeable for or exercisable
for any Common Stock or other securities referred to above (whether or not
presently convertible, exchangeable or exercisable). For the purposes of the
application of this definition, any prohibition or restriction on voting any
shares of stock as a result of any shareholders agreement shall not be given
affect.
40
SECOND: That thereafter the stockholders of said corporation holding
not less than the minimum number of shares required of each class and series of
the Corporation's outstanding capital stock approved the amendment by written
consent in accordance with Section 228 of the Delaware General Corporation Law.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware in all other respects.
IN WITNESS WHEREOF, Synon Corporation, has caused this certificate to
be signed by Christopher Herron, its President, and attested by Paul Wilde, its
Secretary, this 28th day of August 1992.
SYNON CORPORATION
By: /s/ Christopher Herron
------------------------------
Christopher Herron
President
BY: /s/ Paul Wilde
-----------------------------
Paul Wilde
Secretary