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Exhibit 3.1
FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NETGENICS, INC.
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Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware
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NetGenics, Inc. (the "Company"), a corporation organized under the
laws of the State of Delaware, hereby certifies as follows:
1. The original certificate of incorporation was filed with the
Secretary of State of Delaware on May 6, 1996.
2. The Certificate of Incorporation has been amended and restated as
set forth in the attached EXHIBIT A (the "Fifth Amended and Restated Certificate
of Incorporation").
3. That the Fifth Amended and Restated Certificate of Incorporation
has been duly adopted by its stockholders in the manner and by the vote
prescribed by Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Amended and Restated
Certificate to be signed by Raymond J. Merk, its Secretary, on this 30th day of
December, 1999.
NETGENICS, INC.
By: /S/ RAYMOND J. MERK
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Name: Raymond J. Merk
Title: Secretary
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Exhibit A
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FIFTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION,
AS AMENDED
OF
NETGENICS, INC.
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Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware
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FIRST: The name of the Company is NETGENICS, INC.
SECOND: The address of the Company's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington,
New Castle County, Delaware. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The purpose for which the Company is formed is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes which the
Corporation shall have authority to issue is Seventy-Five Million Seven Hundred
Fifty Thousand (75,750,000) shares divided into classes as follows:
Two Million (2,000,000) shares shall be Series A Convertible
Preferred Stock, $.001 par value (the "Series A Preferred Stock");
Two Million (2,000,000) shares shall be Series B Convertible
Preferred Stock, $.001 par value (the "Series B Preferred Stock");
Seven Million Five Hundred Thousand (7,500,000) shares shall
be Series C Convertible Preferred Stock, $.001 par value (the "Series C
Preferred Stock");
Twelve Million (12,000,000) shares shall be Series D
Convertible Preferred Stock, $.001 par value (the "Series D Preferred
Stock");
Nine Million Two Hundred Fifty Thousand (9,250,000) shares
shall be Series E Convertible Preferred Stock, $.001 par value (the
"Series E Preferred Stock"); and
Forty-Three Million (43,000,000) shares shall be Common Stock,
$.001 par value (the "Common Stock").
The following is a statement of the powers, preferences, rights and the
qualifications, limitations or restrictions of the Preferred Stock (as
hereinafter defined) and the Common Stock.
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SECTION I.
Definitions.
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For purposes of this Article FOURTH, the following definitions shall
apply:
(a) "Additional Preferred Stock" shall mean equity securities
of the Company, including Preferred Stock, which have preference over
the Common Stock in right of payment on liquidation.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Company" or the "Corporation" shall mean NetGenics, Inc.
(d) "Original Issue Date" for a series of Preferred Stock
shall mean the date on which the first share of such series of
Preferred Stock is issued.
(e) "Preferred Stock" shall mean the Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series
D Preferred Stock and the Series E Preferred Stock.
SECTION II.
A. PREFERRED STOCK
The preferences and relative, participating, optional or other
rights, and the qualifications, limitations or restrictions of the Preferred
Stock are in their entirety as follows:
SECTION 1. LIQUIDATION RIGHTS. (a) In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Corporation or, at the option of each holder of shares of Preferred Stock
in accordance with paragraph (i) of Section 2 below, in the event of any
reorganization, merger, consolidation or sale subject to the provisions of
paragraph (i) of Section 2 below, the holders of each series of Preferred Stock
shall be entitled to receive, prior to and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders of the
Common Stock by reason of their ownership thereof, an amount per share as may be
fixed for such series (a "Liquidation Value") plus an amount equal to all
accrued or declared but unpaid dividends on each such share. The Liquidation
Value for each share of Series A Preferred Stock shall be Twenty-Five Cents
($0.25) (as adjusted for any stock dividends, combinations or splits with
respect to such shares). The Liquidation Value for each share of Series B
Preferred Stock shall be Fifty Cents ($0.50) (as adjusted for any stock
dividends, combinations or splits with respect to such shares). The Liquidation
Value for each share of Series C Preferred Stock shall be the sum of (x) One
Dollar and Two and One-Half Cents ($1.025) (as adjusted for any stock dividends,
combinations or splits with respect to such shares) (the "Original Series C
Purchase Price") and (y) an amount that reflects a 12% return, compounded
annually, on the Original Series C Purchase Price for each 12 months that has
passed since the Original Issue Date with respect to the Series C Preferred
Stock. The Liquidation Value for each share of Series D Preferred Stock shall be
the sum of (x) Two Dollars ($2.00) (as adjusted for any stock dividends,
combinations or splits with respect to such
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shares) (the "Original Series D Purchase Price") and (y) an amount that reflects
a 12% return, compounded annually, on the Original Series D Purchase Price for
each 12 months that has passed since the Original Issue Date with respect to the
Series D Preferred Stock. The Liquidation Value for each share of Series E
Preferred Stock shall be the sum of (x) Two Dollars and Thirty Cents ($2.30) (as
adjusted for any stock dividends, combinations or splits with respect to such
shares) (the "Original Series E Purchase Price") and (y) an amount that reflects
a 12% return, compounded annually, on the Original Series E Purchase Price for
each 12 months that has passed since the Original Issue Date with respect to the
Series E Preferred Stock.
All of the preferential amounts to be paid to the holders of
the Preferred Stock under this Section 1 shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to, the holders of the Common
Stock in connection with such liquidation, dissolution or winding up. If the
assets or surplus funds to be distributed to the holders of the Preferred Stock
are insufficient to permit the payment to such holders of their full
preferential amount, the assets and surplus funds legally available for
distribution shall be distributed among the holders of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and the Series E Preferred Stock, in each case in respect of
Liquidation Value and accrued and unpaid dividends, and in each case in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
(b) After the payment in full to the holders of the Preferred
Stock of the preferential amounts required by paragraph (a) of this Section 1,
if assets or surplus funds remain in the Corporation, the holders of the Common
Stock shall be entitled to receive an amount equal to One Cent ($0.01) per share
(as adjusted for any stock dividends, combinations or splits with respect to
such shares). Subject to the payment in full to the holders of the Preferred
Stock of the preferential amounts required by paragraph (a) of this Section 1,
if the assets or surplus funds to be distributed to the holders of the Common
Stock are insufficient to permit the payment to such holders of the full amount
provided in this paragraph (b), the asset and surplus funds legally available
for distribution shall be distributed pari passu among the holders of the Common
Stock in proportion to the shares of Common Stock then held by them.
(c) After the distributions described in paragraphs (a) and
(b) above have been paid, the remaining assets and surplus of the Corporation
legally available for distribution, if any, shall be distributed among the
holders of the Common Stock, the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, and
the Series E Preferred Stock, based on the number of shares of Common Stock held
by each such holder (for purposes of such calculation, the shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and the Series E Preferred Stock being deemed to have been
converted into Common Stock immediately prior to the close of business on the
business day fixed for such distribution).
(d) Nothing in this Section 1 set forth shall affect in any
way the right of each holder of shares of Preferred Stock to convert such shares
at any time and from time to time in accordance with Section 2 below.
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SECTION 2. CONVERSION. The holder of any shares of Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time and from time to
time after the date of issuance of such Stock, at the office of the Company or
any transfer agent for such Preferred Stock into such number of fully paid and
nonassessable shares of Common Stock at the Conversion Price (as hereafter
defined) therefore in effect at the time of conversion determined as provided
herein.
(b) CONVERSION PRICE. The Conversion Price for the Preferred
Stock shall be determined as follows: Shares of Series A Preferred Stock shall
be convertible into the number of shares of Common Stock that results from
dividing $0.25 by the conversion price per share (the "Series A Conversion
Price") in effect at the time of conversion for each share of Series A Preferred
Stock being converted. The Series A Conversion Price for the Series A Preferred
Stock at the Original Issue Date shall be $0.25 and shall be subject to
adjustment from time to time as provided herein. Shares of Series B Preferred
Stock shall be convertible into the number of shares of Common Stock that
results from dividing $0.50 by the conversion price per share (the "Series B
Conversion Price") in effect at the time of conversion for each share of Series
B Preferred Stock being converted. The Series B Conversion Price for the Series
B Preferred Stock at the Original Issue Date shall be $0.50 and shall be subject
to adjustment from time to time as provided herein. Shares of Series C Preferred
Stock shall be convertible into the number of shares of Common Stock that
results from dividing $1.025 by the conversion price per share (the "Series C
Conversion Price") in effect at the time of conversion for each share of Series
C Preferred Stock being converted. The Series C Conversion Price for the Series
C Preferred Stock at the Original Issue Date shall be $1.025 and shall be
subject to adjustment from time to time as provided herein. Shares of Series D
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing $2.00 by the conversion price per share (the "Series
D Conversion Price") in effect at the time of conversion for each share of
Series D Preferred Stock being converted. The Series D Conversion Price for the
Series D Preferred Stock at the Original Issue Date shall be $2.00 and shall be
subject to adjustment from time to time as provided herein. Shares of Series E
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing $2.30 by the conversion price per share (the "Series
E Conversion Price") in effect at the time of conversion for each share of
Series E Preferred Stock being converted. The Series E Conversion Price for the
Series E Preferred Stock at the Original Issue Date shall be $2.30 and shall be
subject to adjustment from time to time as provided herein. The "Conversion
Price" shall refer to the Series A Conversion Price, the Series B Conversion
Price, the Series C Conversion Price, the Series D Conversion Price, or the
Series E Conversion Price, as may be appropriate.
(c) AUTOMATIC CONVERSION. (i) Each share of Series A Preferred
Stock and Series B Preferred Stock shall automatically be converted into shares
of Common Stock at the then-effective Series A Conversion Price or Series B
Conversion Price, as the case may be, immediately upon the closing of a Public
Offering (as defined below).
(ii) Each share of Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock shall automatically be converted into shares of
Common Stock at the then-effective Series C Conversion Price, Series D
Conversion Price or Series E Conversion Price, as
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the case may be, immediately upon the earlier of (A) the closing of a Public
Offering or (B) the date specified by vote or written consent or agreement of
(1) in the case of the Series C Preferred Stock, at least 75% of the shares of
the Series C Preferred Stock then outstanding, (2) in the case of the Series D
Preferred Stock, at least 75% of the shares of Series D Preferred Stock then
outstanding, or (3) in the case of the Series E Preferred Stock, at least 75% of
the shares of Series E Preferred Stock then outstanding.
(iii) No such conversion pursuant to clause (i) or (ii)(A) shall occur
unless each holder of Preferred Stock shall have received written notice of the
proposed Public Offering at least 30 days prior to the date the registration
statement relating to that Public Offering becomes effective.
The Company shall have no obligation to issue and deliver to
any such holder of Preferred Stock on the date of automatic conversion a
certificate for the number of shares of Common Stock to which such holder shall
be entitled until such time as such holder has surrendered his certificate or
certificates for his Preferred Stock, duly endorsed, at the office of the
Company or at the office of any transfer agent for the Common Stock or the
holder notifies the Company that such certificates have been lost, stolen or
destroyed and executes an agreement reasonably satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection therewith. All
rights with respect to shares of Preferred Stock shall forthwith after such
automatic conversion pursuant to this paragraph 2(c) terminate, except only the
right of the holders of such shares to receive Common Stock upon surrender of
their certificates for the Preferred Stock and their rights with respect to
unpaid dividends described in paragraph 2(d). "Public Offering" shall be defined
as (i) with respect to the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock, any firm commitment, underwritten public
offering of Common Stock, registered under the Securities Act of 1933, the gross
proceeds of which to the Company (before deducting any underwriting fees and
commissions) are at least $15 million and the public offering price per share
(before deducting any underwriting fees and commissions) of which equals or
exceeds $3.50 per share of Common Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares), and (ii) with respect to
the Series A Preferred Stock and Series B Preferred Stock, any firm commitment,
underwritten public offering of Common Stock, registered under the Securities
Act of 1933, the gross proceeds of which to the Company and/or selling
shareholders (if any) (before deducting any underwriting fees and commissions)
are at least $5 million.
Notwithstanding the foregoing provisions of this paragraph
2(c), in the event of a Public Offering, then as a condition to the consummation
of Public Offering and the automatic conversion set forth in paragraph 2(c),
there shall be paid in full to all holders of the Preferred Stock to be so
converted, all accrued but unpaid dividends and distributions with respect to
such Preferred Stock.
(d) MECHANICS OF CONVERSION; UNPAID DIVIDENDS. Before any
holder of Preferred Stock shall be entitled to convert the same into shares of
Common Stock, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Company or of any transfer agent
for the Preferred Stock or Common Stock, and shall give written notice by mail,
postage prepaid, to the Company at such office that such holder elects to
convert the same and shall state therein the number of shares of Preferred Stock
being converted and the name or names in which the certificate or certificates
for shares of Common Stock are to
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be issued. Thereupon the Company shall promptly issue and deliver at such office
to such holder of Preferred Stock or to the nominee or nominees of such holder a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled. 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, and the person or persons entitled to
receive the share of Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date. All dividends accrued and unpaid prior to surrender of shares of
Preferred Stock surrendered for conversion shall constitute a debt of the
Company payable to the converting shareholder, and no dividend or other
distribution shall be paid on, declared or set apart for the Common Stock until
such debt is fully paid or sufficient funds set apart for the payment thereof.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Company shall at any time or from time to time after the Original Issue Date
effect a subdivision or combination of the outstanding Common Stock, the
Conversion Price then in effect immediately before that subdivision shall be
proportionately adjusted. Any adjustment under this paragraph 2(e) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Company at any time or from time to time after the Original Issue Date
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the Preferred Stock then in effect shall be decreased as of the time
of such issuance or, in the event such a record date shall have been fixed, as
of the close of business on such record date, by multiplying the Conversion
Price for the Preferred Stock then in effect by a fraction:
(1) the numerator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the
time of such issuance or the close of business on such record date,
plus the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, if such record date shall
have been fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the
Conversion Price for the Preferred Stock shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price for the Preferred Stock shall be
adjusted pursuant to this paragraph 2(f) as of the time of actual
payment of such dividends or distributions.
(g) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Company if at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
(i) evidences of indebtedness of the Company, (ii) assets of the Company (other
than cash), or (iii) securities of the Company other than shares of Common
Stock, then and in each such event provision shall be made so that the holders
of
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Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of such evidences,
assets or securities that they would have received had their Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such evidences, assets, or securities receivable by them as
aforesaid during such period giving application to all adjustments called for
during such period under this Section 2 with respect to the rights of the
holders of the Preferred Stock.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE OR SUBSTITUTION.
If the Common Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 2), then and in each such event the holder of each
share of Preferred Stock shall have the right thereafter to convert such share
into the kind and amounts of shares of stock and other securities and property
receivable upon such reorganization, reclassification or other change, by
holders of the number of shares of Common Stock into which such shares of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification or change, all subject to further adjustment as
provided herein.
(i) REORGANIZATION, MERGERS, CONSOLIDATIONS OR SALES OF
ASSETS. If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 2)
or a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all the Company's properties and assets to any
other person, then, as a part of such reorganization, merger, consolidation or
sale, provision shall be made so that the holders of the Preferred Stock shall
thereafter be entitled to receive upon conversion of the Preferred Stock, the
number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such merger or consolidation or sale,
to which a holder of that number of shares of Common Stock deliverable upon
conversion of the Preferred Stock would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 2
with respect to the rights of the holders of the Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the provisions of
this Section 2 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Preferred Stock) shall
be applicable after that event as nearly equivalent as may be practicable. Each
holder of shares of Preferred Stock upon the occurrence of a capital
reorganization, merger or consolidation of the Company or the sale of all or
substantially all its assets and properties as such events are more fully set
forth in this paragraph 2(i) shall have the option of electing treatment of such
holder's shares of Preferred Stock under either this paragraph 2(i) or Section 1
hereof, notice of which election shall be submitted in writing to the Company at
its principal office no later than ten days before the effective date of such
event, PROVIDED that the Company has timely furnished to such holder the notice
required by Section 2(m).
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(j) SALE OF SHARES BELOW CONVERSION PRICE.
(1) (A) If, at any time or from time to time after the
respective Original Issue Date for the Series C Preferred Stock, the
Series D Preferred Stock or the Series E Preferred Stock, as the case
may be, but on or prior to the second anniversary of such respective
Original Issue Date, the Company shall issue or sell Additional Shares
of Common Stock (as hereinafter defined), other than as a dividend as
provided in paragraph 2(f) above, and other than upon subdivision or
combination of shares of Common Stock as provided in paragraph 2(e)
above, without consideration or for a consideration per share less than
the Conversion Price of the Series C Preferred Stock, the Conversion
Price of the Series D Preferred Stock, or the Conversion Price of the
Series E Preferred Stock, as the case may be, in effect immediately
prior to such issuance or sale, then and in each case the Conversion
Price of the Series C Preferred Stock or the Conversion Price of the
Series D Preferred Stock, or the Conversion Price of the Series E
Preferred Stock, as the case may be, shall upon such issuance or sale
be reduced to the price per share at which such Additional Shares of
Common Stock were so issued.
(B) If, with respect to the Series A Preferred Stock and
Series B Preferred Stock at any time or from time to time after the
Original Issue Date for such series of Preferred Stock, or, with
respect to the Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock, at any time or from time to time after the
second anniversary of the respective Original Issue Date with respect
to the Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, the Company shall issue or sell Additional Shares of
Common Stock (as hereinafter defined), other than as a dividend as
provided in paragraph 2(f) above, and other than upon subdivision or
combination of shares of Common Stock as provided in paragraph 2(e)
above, without consideration or for a consideration per share less than
the Conversion Price for such series in effect immediately prior to
such issuance or sale, then and in each case such Conversion Price for
such series of Preferred Stock shall upon such issuance or sale be
reduced to a price determined by DIVIDING (i) an amount equal to the
sum of (A) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the Conversion Price in
effect immediately prior to such issue or sale plus (B) the aggregate
consideration received by the Company for the total number of
Additional Shares of Common Stock so issued, BY (ii) an amount equal to
the sum of (x) the number of shares of Common Stock outstanding
immediately prior to such issue or sale plus (y) the total number of
Additional Shares of Common Stock so issued. "The number of shares of
Common Stock outstanding" at any time for purposes of this paragraph
shall include without limitation all shares of Common Stock then
outstanding and all shares of Common Stock issuable upon the conversion
of any Preferred Stock then outstanding as provided herein. The
adjustment provided for in this paragraph shall first be made for the
Series A Preferred Stock based on the Conversion Price of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock in effect
immediately prior to such issuance or sale, and then shall be made for
the Series B Preferred Stock based on the Conversion Price of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock in effect
immediately prior to such issuance or sale, and then shall be made for
the Series C
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Preferred Stock based on the Conversion Price for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock in effect
immediately prior to such issuance or sale, and then shall be made for
the Series D Preferred Stock based on the Conversion Price for the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock in effect
immediately prior to such issuance or sale, and then shall be made for
the Series E Preferred Stock based on the Conversion Price for the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock in effect
immediately prior to such issuance or sale.
(2) For the purpose of making any adjustment in the Conversion
Price or number of shares of Common Stock purchasable on conversion of
Preferred Stock as provided above, the consideration received by the
Company for any issue or sale of securities shall,
(A) to the extent it consists of cash, be computed at the net
amount of cash received by the Company before deduction of any
underwriting or similar commissions, concessions or
compensation paid or allowed by the Company in connection with
such issue or sale;
(B) to the extent it consists of services or property other
than cash, be computed at the fair value of such services or
property as determined in good faith by the Board; and
(C) if Additional Shares of Common Stock, Convertible
Securities (as hereinafter defined), or rights or options to
purchase either Additional Shares of Common Stock or
Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a
consideration that covers both, be computed as the portion of
the consideration so received that may be reasonably
determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or
rights or options.
(3) For the purpose of the adjustment provided in subsection
(1) of this paragraph 2(j), if at any time or from time to time after
the Original Issue Date the Company shall issue any rights or options
for the purchase of, or stock or other securities convertible into,
Additional Shares of Common Stock (such convertible stock or securities
being hereinafter referred to as "Convertible Securities"), then, in
each case, if the Effective Price (as hereinafter defined) of such
rights, options or Convertible Securities shall be less than the then
existing Conversion Price for any series of the Preferred Stock, the
Company shall be deemed to have issued at the time of the issuance of
such rights or options or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such
shares an amount equal to the total amount of the consideration, if
any, received by the Company for the issuance of such rights or options
or Convertible Securities, plus, in the case of such options or rights,
the minimum amounts of consideration, if any, payable to the Company
upon exercise or conversion of such options, rights or warrants. For
purposes of the foregoing, "Effective
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Price" shall mean the quotient determined by dividing the total of all
such consideration by such maximum number of Additional Shares of
Common Stock. No further adjustment of the Conversion Price adjusted
upon the issuance of such rights, options or Convertible Securities
shall be made as a result of the actual issuance of Additional Shares
of Common Stock on the exercise of any such rights or options or the
conversion of any such Convertible Securities.
If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without
having been exercised, the Conversion Price adjusted upon the issuance
of such rights, options or Convertible Securities shall be readjusted
to the Conversion Price that would have been in effect had an
adjustment been made on the basis that the only Additional Shares of
Common Stock so issued were the Additional Shares of Common Stock, if
any, actually issued or sold on the exercise of such rights or options
or rights of conversion of such Convertible Securities, and such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise, plus
the consideration, if any, actually received by the Company for the
granting of all such rights or options, whether or not exercised, plus
the consideration received for issuing or selling the Convertible
Securities actually converted plus the consideration, if any, actually
received by the Company on the conversion of such Convertible
Securities.
(4) For the purpose of the adjustment provided for in
subsection (1) of this paragraph 2(j), if at any time or from time to
time after the Original Issue Date the Company shall issue any rights,
options or warrants for the purchase of Convertible Securities, then,
in each such case, if the Effective Price thereof is less than the then
current Conversion Price, the Company shall be deemed to have issued at
the time of the issuance of such rights, options or warrants the
maximum number of Additional Shares of Common Stock issuable upon
conversion of the total amount of Convertible Securities covered by
such rights, options or warrants and to have received as consideration
for the issuance of such Additional Shares of Common Stock an amount
equal to the amount of consideration, if any, payable to the Company
upon the conversion of such Convertible Securities. For purposes of the
foregoing, "Effective Price" shall mean the quotient determined by
dividing the total amount of such consideration by such maximum number
of Additional Shares of Common Stock. No further adjustment of such
Conversion Price adjusted upon the issuance of such rights, options or
warrants shall be made as a result of the actual issuance of the
Convertible Securities upon the exercise of such rights or options or
upon the actual issuance of Additional Shares of Common Stock upon the
conversion of such Convertible Securities.
The provisions of subsection (3) above for the readjustment of
such Conversion Price upon the expiration of rights or options or the rights of
conversion of convertible Securities, shall apply mutatis mutandis to the
rights, options and Convertible Securities referred to in this subsection (4).
(k) DEFINITION. The term "Additional Shares of Common Stock"
as used herein shall mean all shares of Common Stock issued or deemed issued by
the Company other than (1) shares of Common Stock issued upon conversion of the
Preferred Stock, (2) shares of
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Common Stock issued upon exercise of any warrants outstanding as of the Closing
(as defined in the Series E Convertible Preferred Stock Purchase Agreement,
dated as of December __, 1999, among the Company and the purchasers named in
SCHEDULE I attached thereto) and (3) up to an additional 4,000,000 shares of
Common Stock (as adjusted for all stock dividends, stock splits, subdivisions
and combinations) issued before or after the Original Issue Date to employees,
officers, directors, consultants or other persons performing services for the
Company (if so issued solely because of any such person's status as an officer,
director, employee, consultant or other person performing services for the
Company and not as part of any offering of the Company's securities) pursuant to
any stock option plan, stock purchase plan or management incentive plan,
agreement or arrangement approved by the Board of Directors of the Company.
(l) ACCOUNTANTS' CERTIFICATE OF ADJUSTMENT. In each case of an
adjustment or readjustment of the Conversion Price for the number of shares of
Common Stock or other securities issuable upon conversion of the Preferred
Stock, the Company, at its expense, shall cause independent certified public
accountants of recognized standing selected by the Company (who may be the
independent certified public accountants then auditing the books of the Company)
to compute such adjustment or readjustment in accordance herewith and prepare a
certificate showing such adjustment or readjustment, and shall mail such
certificate, by first-class mail, postage prepaid, to each registered holder of
the Preferred Stock at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based including a
statement of (i) the consideration received or to be received by the Company for
any Additional Shares of Common Stock issued or sold or deemed to have been
issued or sold, (ii) the Conversion Price at the time in effect for each series
of the Preferred Stock, and (iii) the number of Additional Shares of Common
Stock and the type and amount, if any, of other property which at the time would
be received upon conversion of the Preferred Stock.
(m) NOTICES OF RECORD DATE. In the event of (i) any taking by
the Company of a record of the holders of any class or series of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution or (ii) any reclassification or recapitalization
of the capital stock of the Company, any merger or consolidation or the Company,
or any transfer of all or substantially all the assets of the Company to any
other corporation, entity or person, or any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall mail to each holder of Preferred Stock at least 30 days prior to
the record date or the effective date of such transaction, as applicable,
specified therein, a notice specifying (A) the date on which any such record is
to be taken for the purpose of such dividend or distribution and a description
of such dividend or distribution, (B) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective, and (C) the time, if any is to be
fixed, as to when the holders of record of Common Stock (or other securities)
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
(n) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of shares of Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such
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fraction multiplied by the fair market value of one share of the Company's
Common Stock on the date of conversion, as determined in good faith by the
Board. Whether or not fractional shares are issuable upon such conversion shall
be determined on the basis of the total number of shares of Preferred Stock the
holder is at the time converting into Common Stock and the number of shares of
Common Stock issuable upon such aggregate conversion.
(o) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Company
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Preferred Stock, in addition to such number of its shares of
Common Stock as may from time to time be required, at such time, to be issued by
the Company upon exercise of all then-exercisable warrants and options to
purchase shares of Common Stock or the right to convert other convertible
securities into shares of Common Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock. As a condition precedent to the
taking of any action which would cause an adjustment to the Conversion Price,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient in order that it may
validly and legally issue the shares of is Common Stock issuable based upon such
adjusted Conversion Price.
(p) NOTICES. Any notice required by the provisions of this
Section 2 to be given to the holder of shares of the Preferred Stock shall be
deemed given when personally delivered to such holder or five business days
after the same has been deposited in the United States mail, certified or
registered mail, return receipt requested, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the Company.
(q) PAYMENT OF TAXES. The Company will pay all taxes and other
governmental charges (other than taxes measured by the revenue or income of the
holders of the Preferred Stock) that may be imposed in respect of the issue or
delivery of shares of Common Stock upon conversion of shares of the Preferred
Stock.
(r) NO DILUTION OR IMPAIRMENT. The Company shall not amend its
Certificate of Incorporation or participate in any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, for the purpose of avoiding
or seeking to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in carrying out all such action as may be reasonably necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against dilution or other impairment
SECTION 3. VOTING RIGHTS.
(a) Except as otherwise expressly provided herein or as
required by law, the holders of each share of Preferred Stock shall be entitled
to vote on all matters upon which holders of Common Stock have the right to vote
and, with respect to such vote, shall be entitled to notice of any stockholders'
meeting in accordance with the By-Laws of the Company, and shall be entitled to
a number of votes equal to the largest number of full shares of Common Stock
into which such shares of Preferred Stock could be converted, pursuant to the
provisions of Section 2 hereof, at the record date for the determination of
shareholders entitled to vote on
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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. Except as otherwise
expressly provided herein, or to the extent class or series voting is otherwise
required by law or agreement, the holders of shares of Preferred Stock and
Common Stock shall vote together as a single class and not as separate classes.
(b) The number of directors constituting the entire Board
shall be fixed at a number not greater than seven and the following persons
shall have been elected as the directors and shall each hold such position as of
the Original Issue Date for the Series D Preferred Stock: one director
designated by International Biotechnology Trust plc ("IBT"), one director
designated by Oxford Bioscience Partners L.P. ("Oxford"), one director
designated by Venrock Associates L.P. ("Venrock"), one director designated by
Incyte Pharmaceuticals, Inc. ("Incyte"), and three directors designated by the
holders of the Common Stock, the Series A Preferred Stock and the Series B
Preferred Stock, acting together as a single class. Each of IBT, Oxford, Venrock
and Incyte shall retain the right to designate one (1) member of the Board of
Directors, so long as it and its affiliates continue to hold at least 125,000
shares of Common Stock or other securities of the Company convertible into at
least 125,000 shares of Common Stock. A vacancy occurring because of the death,
resignation or removal of a director designated by a stockholder as set forth
above may be filled solely by the designee of such stockholder.
SECTION 4. DIVIDEND RIGHTS.
At any time a dividend is declared on the outstanding shares
of Common Stock, a dividend shall be declared on the outstanding shares of
Preferred Stock in an amount equal to that which would have been declared on the
Preferred Stock if such Preferred Stock had been converted into the maximum
number of shares of Common Stock convertible upon exercise of the Conversion
Rights described in Section 2 hereof.
SECTION 5. COVENANTS. (a) So long as fifty percent (50%) or
more of the number of shares of Preferred Stock authorized hereby shall be
outstanding (as adjusted for all subdivisions and combinations), the Company
shall not, without first obtaining the affirmative vote or written consent of a
majority of such outstanding shares of Preferred Stock, voting together as one
class:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of the Preferred Stock of any series;
(ii) reclassify any Common Stock 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 any the Preferred Stock;
(iii) apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock of the Company or any rights, options,
warrants to purchase, or securities convertible into, Common Stock of the
Corporation except from employees of the Corporation upon termination of
employment and in any stock option or other agreement entered into by the
Company;
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(iv) (y) create or issue any securities of the Company which
have equity features and which rank on a parity with or senior to any of the
Preferred Stock upon payment of dividends or upon liquidation or other
distribution of assets or with a conversion price lower than that of any of the
Preferred Stock or terms more favorable than those of any of the Preferred
Stock, or (z) sell or issue any shares of Common Stock of the Company for which
the consideration is other than cash;
(v) increase the authorized number of shares of any series of
Preferred Stock;
(vi) merge, consolidate, sell, lease, exchange or otherwise
dispose of all or substantially all its property and assets unless the Company
is the surviving corporation following such merger or consolidation; or
(vii) increase the authorized number of directors constituting
the Board of Directors of the Company.
(b) So long as 250,000 shares of Series C Preferred Stock shall be
outstanding, the Company shall not, without first having obtained the
affirmative vote or written consent of the holders of not less than sixty-six
and two-thirds percent (66-2/3%) of such outstanding shares of Series C
Preferred Stock;
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Series C Preferred Stock;
(ii) reclassify any Common Stock or Preferred Stock into
shares having any preference or priority as to assets superior to or on a parity
with any such preference or priority of the Series C Preferred Stock;
(iii) create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Company having a preference
over or being on a parity with the Series C Preferred Stock as to dividends,
voting, liquidation, redemption, or other distributions of assets or having
rights equal or superior to any of the rights of the Series C Preferred Stock;
(iv) effect any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets of the Company or any of
its subsidiaries, any liquidation, dissolution or winding up of, or any
consolidation or merger involving the Company or any of its subsidiaries or any
recapitalization of the Company or any transaction or series of transactions in
which more than 50% of the voting power of the Company is disposed of;
(v) apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock of the Company or any rights, options,
warrants to purchase, or securities convertible into, Common Stock of the
Corporation except from employees of the Corporation upon termination of
employment and in any stock option or other agreement entered into by the
Company;
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(vi) (y) create or issue any securities of the Company which
have equity features and which rank on a parity with or senior to any of the
Preferred Stock upon payment of dividends or upon liquidation or other
distribution of assets or with a conversion price lower than that of any of the
Preferred Stock or terms more favorable than those of any of the Preferred
Stock, or (z) sell or issue any shares of Common Stock of the Company for which
the consideration is other than cash;
(vii) pay or declare any dividend on the Common Stock or any
junior equity security other than a dividend payable in Common Stock;
(viii) increase the authorized number of shares of Series C
Preferred Stock; or
(ix) increase the authorized number of directors constituting
the Board of Directors of the Company.
(c) So long as 250,000 shares of Series D Preferred Stock shall be
outstanding, the Company shall not, without first having obtained the
affirmative vote or written consent of the holders of sixty-six and two-thirds
percent (66-2/3%) of such outstanding shares of Series D Preferred Stock;
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Series D Preferred Stock;
(ii) reclassify any Common Stock or Preferred Stock into
shares having any preference or priority as to assets superior to or on a parity
with any such preference or priority of the Series D Preferred Stock;
(iii) create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Company having a preference
over or being on a parity with the Series D Preferred Stock as to dividends,
voting, liquidation, redemption, or other distributions of assets or having
rights equal or superior to any of the rights of the Series D Preferred Stock;
(iv) effect any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets of the Company or any of
its subsidiaries, any liquidation, dissolution or winding up of, or any
consolidation or merger involving the Company or any of its subsidiaries or any
recapitalization of the Company or any transaction or series of transactions in
which more than 50% of the voting power of the Company is disposed of;
(v) apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock of the Company or any rights, options,
warrants to purchase, or securities convertible into, Common Stock of the
Corporation except from employees of the Corporation upon termination of
employment and in any stock option or other agreement entered into by the
Company;
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(vi) (y) create or issue any securities of the Company which
have equity features and which rank on a parity with or senior to any of the
Preferred Stock upon payment of dividends or upon liquidation or other
distribution of assets or with a conversion price lower than that of any of the
Preferred Stock or terms more favorable than those of any of the Preferred
Stock, or (z) sell or issue any shares of Common Stock of the Company for which
the consideration is other than cash;
(vii) pay or declare any dividend on the Common Stock or any
junior equity security other than a dividend payable in Common Stock;
(viii) increase the authorized number of shares of Series D
Preferred Stock; or
(ix) increase the authorized number of directors constituting
the Board of Directors of the Company.
(d) So long as 250,000 shares of Series E Preferred Stock shall be
outstanding, the Company shall not, without first having obtained the
affirmative vote or written consent of the holders of sixty-six and two-thirds
percent (66-2/3%) of such outstanding shares of Series E Preferred Stock;
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Series E Preferred Stock;
(ii) reclassify any Common Stock or Preferred Stock into
shares having any preference or priority as to assets superior to or on a parity
with any such preference or priority of the Series E Preferred Stock;
(iii) create, authorize or issue any other class or classes of
stock or series of Common Stock or Preferred Stock or any security convertible
into or evidencing the right to purchase shares of any class or series of Common
Stock or Preferred Stock or any capital stock of the Company having a preference
over or being on a parity with the Series E Preferred Stock as to dividends,
voting, liquidation, redemption, or other distributions of assets or having
rights equal or superior to any of the rights of the Series E Preferred Stock;
(iv) effect any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets of the Company or any of
its subsidiaries, any liquidation, dissolution or winding up of, or any
consolidation or merger involving the Company or any of its subsidiaries or any
recapitalization of the Company or any transaction or series of transactions in
which more than 50% of the voting power of the Company is disposed of;
(v) apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock of the Company or any rights, options,
warrants to purchase, or securities convertible into, Common Stock of the
Corporation except from employees of the Corporation upon termination of
employment and in any stock option or other agreement entered into by the
Company;
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(vi) (y) create or issue any securities of the Company which
have equity features and which rank on a parity with or senior to any of the
Preferred Stock upon payment of dividends or upon liquidation or other
distribution of assets or with a conversion price lower than that of any of the
Preferred Stock or terms more favorable than those of any of the Preferred
Stock, or (z) sell or issue any shares of Common Stock of the Company for which
the consideration is other than cash;
(vii) pay or declare any dividend on the Common Stock or any
junior equity security other than a dividend payable in Common Stock;
(viii) increase the authorized number of shares of Series E
Preferred Stock; or
(ix) increase the authorized number of directors constituting
the Board of Directors of the Company.
B. COMMON STOCK
Each share of Common Stock shall have one vote upon all matters to be
voted on by the holders of Common Stock. Each share of Common Stock shall be
entitled to participate equally in all dividends payable with respect to the
Common Stock and to share ratably, subject to the rights and preferences of any
series of Preferred Stock, in all assets of the Company in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company, or upon any distribution of the assets of the Company.
FIFTH: To the fullest extent permitted by the General
Corporation Law of the State of Delaware, as the same exists or may hereafter be
amended, a Director of the Company shall not be liable to the Company or its
stockholders for monetary damages for breach of a fiduciary duty as a Director.
Any repeal or modification of the foregoing provisions of this
Article FIFTH by the stockholders of the Company shall be prospective only and
shall not adversely affect any right or protection of a Director of the Company
existing at the time of such repeal or modification for or with respect to any
acts or omissions of a Director occurring prior to such repeal or modification.
SIXTH: Elections of Directors need not be by written ballot
unless and to the extent that the By-Laws so provide.
SEVENTH: The Board of Directors is authorized to make, alter
or repeal the By-Laws of the Company.
EIGHTH: Any one or more Directors may be removed with or
without cause, by the vote or written consent of the holders of a majority of
the issued and outstanding shares of stock of the Company entitled to be voted
at an election of Directors.
For purposes of this Article EIGHTH, so long as IBT holds at
least 1,250,000 shares of Series D Preferred Stock, removal with "cause" shall
mean: (i) any willful action which, in the good faith judgment of a majority of
the Board of Directors, materially adversely
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affects the Company, or the business or property of the Company, (ii) the
commission of a felony (as determined by a plea or a finding of guilt in a court
of competent jurisdiction), or (iii) failure or refusal to perform material
duties as a director, such as the continual failure to attend meetings of the
Board of Directors, which failure or refusal remains uncured (by the director
whose removal for cause is under consideration) for 15 days following written
notice, specifying such failure or refusal, to such director.
Meetings of stockholders shall be held at such place, within
or without the State of Delaware, as may be designated by or in the manner
provided in the By-Laws, or, if not so designated, at the registered office of
the Company in the State of Delaware. Elections of directors need not be by
written ballot unless and to the extent that the By-Laws so provide.
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