THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF M-WISE,
INC.
m-Wise, Inc. (the "Corporation"), a corporation organized and
existing under the General Corporation Law of the State of
Delaware DOES HEREBY CERTIFY:
FIRST: That the Corporation was originally incorporated in Delaware under the
name Wireless Auctions, Inc., and it filed its original Certificate of
Incorporation with the Secretary of State of Delaware on February 1, 2000. On
September 14, 2000, the Corporation filed with the Secretary of State of the
State of Delaware a Certificate of Amendment to its Certificate of
Incorporation. On October 11, 2000, the Corporation filed with the Secretary of
State of the State of Delaware a Certificate of Amendment to its Certificate of
Incorporation changing its name to m-Wise, Inc. On December 21, 2000, the
Corporation filed with the Secretary of State of the State of Delaware a
Certificate of Designation, Preferences and Rights of the Preferred A Stock (par
value $0.01 per share). On January 10, 2001, the Corporation filed with the
Secretary of State of the State of Delaware the Amended and Restated Certificate
of Incorporation. On March 5, 2002, the Corporation filed with the Secretary of
State of the State of Delaware the Second Amended and Restated Certificate of
Incorporation. SECOND: That the Third Amended and Restated Certificate of
Incorporation of m-Wise, Inc. in the form attached hereto as Exhibit A has been
duly adopted in accordance with the provisions of Sections 245 and 242 of the
General Corporation Law of the State of Delaware by the directors and the
stockholders of the Corporation. THIRD: That the Third Amended and Restated
Certificate of Incorporation so adopted is as set forth in Exhibit A attached
hereto and is hereby incorporated herein by reference. IN WITNESS WHEREOF,
m-Wise, Inc. has caused this Certificate to be signed by its Chief Executive
Officer and attested to by its Secretary on January __, 2003. M-WISE, INC. By:
Shay Ben-Asulin, Chief Executive Officer
ATTEST:
By:
Shay Ben-Asulin, Secretary
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
M-WISE, INC.
First : The name of the corporation (hereinafter called the "Corporation") is
m-Wise, Inc.
Second : The address of the registered office of the Corporation in the State of
Delaware is 2711 Centerville Road, Suite 400, New Castle County, Wilmington,
Delaware 19808, and the name of the registered agent of the Corporation in the
State of Delaware at such address is The Company Corporation. Third : The
purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware. Fourth : A. The Corporation is authorized to issue two classes of
shares to be designated respectively Preferred Stock ("Preferred Stock") and
Common Stock ("Common Stock"). The total number of shares of capital stock that
the Corporation is authorized to issue is Three Hundred Eighty Million
(380,000,000). The total number of shares of Preferred Stock the Corporation is
authorized to issue is One Hundred and Seventy Million (170,000,000). The total
number of shares of Common Stock the Corporation is authorized to issue is Two
Hundred and Ten Million (210,000,000). The Preferred Stock shall have a par
value of $0.01 per share and the Common Stock shall have a par value of $0.01
per share. B. The Preferred Stock shall be divided into series. The first series
shall consist of Three Hundred Twenty-Five Thousand (325,000) shares and is
designated "Series A Preferred Stock." The second series shall consist of Three
Million (3,000,000) shares and is designated "Series B Preferred Stock." The
third series shall consist of Twenty Million (20,000,000) shares and is
designated "Series C Preferred Stock". The remaining shares of Preferred Stock
may be issued from time to time in one or more series. The Board of Directors of
the Corporation (the "Board of Directors") is expressly authorized to provide
for the issue of all or any of the remaining shares of the Preferred Stock in
one or more series, and to fix the number of shares and to determine or alter,
for each such series, such voting powers, full or limited, or no voting powers,
and such designations, preferences, and relative, participating, optional, or
other rights and such qualifications, limitations, or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issue of such shares (a "Preferred Stock
Designation") and as may be permitted by the General Corporation Law of the
State of Delaware. The Board of Directors is also expressly authorized to
increase or decrease (but not below the number of shares of such series then
outstanding, including shares reserved for issuance upon the exercise of
warrants) the number of shares of any series of Preferred Stock other than the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
subsequent to the issue of shares of that series. In case the number of shares
of any such series shall be so decreased, the shares constituting such decrease
shall resume the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series. C. The powers,
preferences, rights, restrictions, and other matters relating to the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock
are as follows:
1. Dividends.
a. The holders of shares of Series B Preferred Stock and Series C Preferred
Stock shall be entitled to receive per share dividends at the rate of 10% of the
Series B Preferred Stock and Series C Original Purchase Price (as defined below)
per annum (subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares), payable only when, as and if declared by the Board of Directors of the
Corporation. The right to receive dividends on Series B Preferred Stock and
Series C Preferred Stock shall be non-cumulative, and no right to dividends
shall accrue by reason of the fact that no dividend has been declared on the
Series B Preferred Stock and Series C Preferred Stock in any prior year. b. The
Corporation shall not declare or pay any cash dividends on shares of Common
Stock until the holders of the Series B Preferred Stock and Series C Preferred
Stock then outstanding shall have first or simultaneously received a dividend on
each outstanding share of Series B Preferred Stock or Series C Preferred Stock,
as applicable, in an amount equal to the per share amount set forth in Section
C.1(a) plus the product of (i) the per share amount, if any, of the dividends to
be declared, paid or set aside for the Common Stock multiplied by (ii) the
number of whole shares of Common Stock into which such share of Series B
Preferred Stock or Series C Preferred Stock, as applicable, is then convertible.
2. Liquidation Preference.
a. In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series C and B
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of the Corporation to the holders of Series A
Preferred Stock or Common Stock by reason of their ownership thereof, an amount
per share equal to three (3) times the price at which such share was issued (as
adjusted for any stock dividends, combinations, splits or recapitalizations) for
each share of Series C and B Preferred Stock then held by them (the "Preferred
Stock Preference Amount"). If, upon the occurrence of such event, the assets and
funds thus distributed among the holders of the Series C and B Preferred Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed first,
ratably among the holders of the Series C Preferred Stock and next ratably among
the holders of the Series B Preferred Stock in proportion to the preferential
amount each such holder is otherwise entitled to receive. b. Upon completion of
the distribution required by Sections C.2(a) above, the remaining assets of the
Corporation available for distribution to stockholders shall be distributed
among the holders of the Series C Preferred Stock, the Series B Preferred Stock,
Series A Preferred Stock and Common Stock pro rata based on the number of shares
of Common Stock held by each holder of Common Stock, Series A Preferred Stock,
Series B Preferred Stock, and the Series C Preferred Stock (assuming conversion
of all such Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock).
c. Whenever the distribution provided for in this Section C.2 shall be payable
in securities or property other than cash, the value of such distribution shall
be the fair market value of such securities or other property as determined in
good faith by the Board of Directors or, if applicable, by a receiver in
bankruptcy. d. For purposes of this Section C.2 (and for such purpose only), a
liquidation, dissolution or winding up of the Corporation shall include an event
in which the Corporation shall sell, convey, or otherwise dispose of or encumber
all or substantially all of its assets or property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any other transaction or series of related transactions
in which at least fifty percent (50%) of the voting power of the Corporation is
disposed of or otherwise transferred (hereinafter shall be referred as "M&A
DEAL"), provided that this Section C.2(d) shall not apply to a merger effected
exclusively for the purpose of changing the domicile of the Corporation without
affecting the percentage ownership interests in the Corporation. In the event of
such an M&A Deal , if the consideration received by the Corporation is other
than cash, its value will be deemed its fair market value. Any securities shall
be valued as follows: (i) Securities not subject to "investment letter" (e.g.,
federal or state securities laws restrictions) or other similar restrictions on
free marketability: (1) If traded on a securities exchange or The Nasdaq Stock
Market, the value shall be deemed to be the average of the closing prices of the
securities on such exchange over the thirty-day period ending three (3) days
prior to the closing or the occurrence of the M&A Deal; (2) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing bid
or sale prices (whichever is applicable) over the thirty-day period ending three
(3) days prior to the closing or the occurrence of the M&A Deal; and (3) If
there is no active public market, the value shall be the fair market value
thereof, as mutually determined by the Board of Directors and the holders of at
least a majority of the voting power of all then outstanding shares of Series B
and C Preferred Stock. (ii) The valuation of securities subject to investment
letter (either registered securities or non registered) or other restrictions on
free marketability (other than restrictions arising solely by virtue of a
shareholder's status as an affiliate or former affiliate) shall be made at such
time as the securities shall be fully registered and freely tradable and until
such time the consideration shall be kept in escrow by the Corporation legal
counsel under terms to be agreed by the Corporation and the legal counsel unless
otherwise resolved by the majority of the Series A, B and C Preferred
Stockholders for all shareholders of the company in order to verify allocation
in accordance with this section C.2(a) or C.2(e), as applicable. At such time as
the securities are fully registered and freely tradable, the valuation shall be
made in accordance with the provisions of section C.2(d)(i) above. (e) If an
event that an M&A Deal occurs within six months
following the adoption of this Third Amended and Restated Certificate of
Incorporation, Section C.2 (a) shall not apply and any consideration received by
the Corporation shall be distributed as follows: (i) The holders of the Series C
and B Preferred Stock shall be entitled to receive an amount equal to the
Preferred Stock Preference Amount, allocated on a pro rata basis amongst them.
The Preference Amount will be paid in three separate installments equal to one
third of the Preferred Stock Preference Amount each (each, an "Installment").
(ii) Following the payment of the first Installment, the holders of the Series A
Preferred Stock shall be entitled to receive an amount per share equal to 40% of
the price at which each Preferred A Share was issued (as adjusted for any stock
dividends, combinations, splits or recapitalizations) (the entire amount, "The
Preferred A Preference Amount"). (iii) Thereafter, the management of the
Corporation shall be entitled to receive such amounts as will be duly resolved
by the Corporation at any time prior to the consummation of the M&A Deal.
(iv) Thereafter, the second and third Installments distributions shall be made,
following each of which, the holders of the Series A Preferred Stock shall be
entitled to receive an amount per share equal to 30% of the Preferred A
Preference Amount.
(v) Each payment according to the order set forth in Section C.2 (e)
shall be distributed to the applicable series of stock, prior and in preference
to any distribution of any of the assets of the Corporation to the other
stockholders by reason of their ownership thereof. If, upon payment the assets
and funds thus distributed among the holders of stock entitled to according to
the priority set forth in Section C.2 (e) shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among such holders in proportion to the
preferential amount each such holder is otherwise entitled to receive and in
accordance with the order of precedence set forth in section C.2(e)(i-iv).
(vi) Any remaining balance shall be allocated ratably among
all stockholders on an as-converted basis.
3. Voting Rights; Directors.
a. Each holder of shares of the Series A Preferred Stock, Series B Preferred
Stock and the Series C Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which such shares of Series A
Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock could
be converted and shall have voting rights and powers equal to the voting rights
and powers of the Common Stock (except as otherwise expressly provided herein or
as required by law, voting together with the Common Stock as a single class) and
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws of the Corporation. Fractional votes shall not, however, be permitted and
any fractional voting rights resulting from the
above formula (after aggregating all shares into which shares of Series A
Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward). Each holder of Common Stock shall be
entitled to one (l) vote for each share of Common Stock held. b. The Board of
Directors shall initially consist of five (5) members. The holders of a majority
of the Series A Preferred Stock, voting together as a class, shall have the
exclusive right to nominate and elect one (1) member of the Board of Directors
The holders of a majority of the Series B Preferred Stock, voting together as a
class, shall have the exclusive right to nominate and elect one (1) member of
the Board of Directors. The holders of a majority of the Series C Preferred
Stock, voting together as a class, shall have the exclusive right to nominate
and elect two (2) members of the Board of Directors. The remaining one (1)
member of the Board of Directors shall be nominated and elected by Putchkon.com
LLC and Proton Marketing Associates LLC. c. In the case of any vacancy in the
office of a director occurring among the directors elected by the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Common Stock pursuant to Section C.3(b) hereof, the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Common
Stock, as applicable, may, by affirmative vote of a majority thereof, elect a
successor or successors to hold the office for the unexpired term of the
director or directors whose place or places shall be vacant. Any director who
shall have been elected by the holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Common Stock including any director
so elected as provided in the preceding sentence hereof, may be removed during
the aforesaid term of office, whether with or without cause, only by the
affirmative vote of the holders of a majority of the shares comprising the class
of stockholders having the right under Section C.3(b) hereof to elect such
director. 4. Conversion. The holders of the Series A Preferred Stock and Series
B Preferred Stock shall have conversion rights as follows: a. Right to Convert.
(i) 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, at
the office of the Corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing the Series A Original Issue Price by the Conversion Price applicable
to such share, determined as hereafter provided, in effect on the date the
certificate is surrendered for conversion. The Series A Original Issue Price for
each share of Series A Preferred Stock shall be $4.45 (the "Series A Original
Issue Price") and the initial Conversion Price for each share of Series A
Preferred Stock (the "Series A Conversion Price") shall be $4.45. (ii) Each
share of Series B Preferred Stock shall be convertible, at the option of the
holder thereof, at any time after the date of issuance of such share, at the
office of the Corporation or any
transfer agent for such stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing the Series B Original Issue
Price by the Conversion Price applicable to such share, determined as hereafter
provided, in effect on the date the certificate is surrendered for conversion.
The Series B Original Issue Price for each share of Series B Preferred Stock
shall be $8.17 (the "Series B Original Issue Price") and the initial Conversion
Price for each share of Series B Preferred Stock (the "Series B Conversion
Price") shall be $8.17. (iii) Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing the Series C Original Issue Price by
the Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion. The Series
C Original Issue Price for each share of Series C Preferred Stock shall be
$0.048 (the "Series C Original Issue Price") and the initial Conversion Price
for each share of Series C Preferred Stock (the "Series C Conversion Price")
shall be equal to the Series C Original Issue Price. (iv) The initial Series A
Conversion Price, Series B Conversion Price and Series C Conversion Price shall
be adjusted as hereinafter provided. b. Automatic Conversion. Each share of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall automatically be converted into shares of Common Stock at the
then-effective Series A Conversion Price, Series B Conversion Price and Series C
Conversion Price, respectively, upon the earlier of (i) the date specified by
written consent or agreement of holders of at least a majority of the shares of
Series B Preferred Stock then outstanding or (ii) immediately upon the sale of
the Common Stock in a firm commitment, underwritten public offering registered
in the United States under the Securities Act of 1933, as amended (the
"Securities Act"), or in a public offering effected on the London Stock
Exchange, the Frankfurt Stock Exchange or the Paris Stock Exchange under
applicable securities laws, other than a registration relating solely to a
transaction under Rule 145 under the Securities Act or to an employee benefit
plan of the Corporation, which reflects a pre-offering valuation of the Company
of at least $50,000,000 ("QIPO"). c. Mechanics of Conversion. (i) Before any
holder of Series A Preferred Stock or Series B Preferred Stock or Series C
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for such
stock, and shall give written notice to the Corporation at such office that he
elects to convert the same and shall state therein the name or names in which he
wishes the certificate or certificates for shares of Common Stock to be issued.
The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder of Series A Preferred Stock or Series B Preferred Stock or Series C
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which he shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of surrender of the shares of Series A Preferred Stock or Series B
Preferred Stock or Series C Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date. (ii) If the conversion is in
connection with an underwritten offering of securities pursuant to the
Securities Act, the conversion may, at the option of any holder tendering shares
of Series A Preferred Stock or Series B Preferred Stock or Series C Preferred
Stock for conversion, be conditioned upon the closing with the underwriters of
the sale of securities pursuant to such offering, in which event the person(s)
entitled to receive the Common Stock upon conversion of the Series A Preferred
Stock or Series B Preferred Stock or Series C Preferred Stock shall not be
deemed to have converted such Series A Preferred Stock or Series B Preferred
Stock or Series C Preferred Stock until immediately prior to the closing of such
sale of securities. d. Adjustments to Series A Conversion Price and Series B
Conversion Price for Certain Diluting Issues. (i) Special Definitions. For
purposes of this Section C.4(d), the following definitions apply: (1) "Options"
shall mean rights, options, or warrants to subscribe for, purchase or otherwise
acquire either Common Stock or Convertible Securities (as defined below). (2)
"Original Issue Date" shall mean the date on which a share of Series A Preferred
Stock or Series B Preferred Stock or Series C Preferred Stock, as the case may
be, was first issued. (3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock, Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock) or other securities convertible
into or exchangeable or exercisable for Common Stock. (4) "Additional Shares of
Common Stock" shall mean all shares of Common Stock issued (or, pursuant to
Section C.4(d)(iii)), deemed to be issued) by the Corporation after the Original
Issue Date, other than shares of Common Stock issued or issuable: (A) upon
conversion of shares of Series A Preferred Stock or Series B Preferred Stock or
Series C Preferred Stock; (B) to officers, directors or employees of,
consultants, or subcontractors to, the Corporation pursuant to stock option or
stock purchase plans or as incentive approved by the Board of Directors; (C) as
a dividend or distribution on Series A Preferred Stock or Series B Preferred
Stock or Series C Preferred Stock for which adjustment of the Series A
Conversion Price or Series B Conversion Price or the Series C Conversion Price
is made pursuant to Section C.4(e); or
(D) upon exercise of a warrant dated April 26, 2000 to purchase 56,180 shares of
Series A Preferred Stock and a warrant dated the original issuance date of the
Series B Preferred Stock to purchase a number of shares of Series B Preferred
Stock to be calculated in the manner set forth in such warrant and any warrant
for the purchase of Series C Preferred Stock. (ii) No Adjustment of Conversion
Price. Any provision herein to the contrary notwithstanding, no adjustment in
the Conversion Price for a series of Preferred Stock shall be made in respect of
the issuance of Additional Shares of Common Stock unless the consideration per
share (determined pursuant to Section C.4(d)(v) hereof) for an Additional Share
of Common Stock issued or deemed to be issued by the Corporation is less than
the Conversion Price for such series of Preferred Stock in effect on the date
of, and immediately prior to such issue. (iii) Deemed Issue of Additional Shares
of Common Stock. In the event the Corporation at any time or from time to time
after the Original Issue Date shall issue any Options or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities then entitled to receive any such Options or Convertible Securities,
then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein designed to protect
against dilution) of Common Stock issuable upon the exercise of such Options or,
in the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date;
provided that in any such case in which Additional Shares of Common Stock are
deemed to be issued: (1) no further adjustments in the Series A Conversion Price
or Series B Conversion Price or Series C Conversion Price shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities; (2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Series A Conversion Price or Series B Conversion Price or Series C Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities; provided,
however, that no such adjustment of the Series A Conversion Price or Series B
Conversion Price or Series C Conversion Price shall affect Common Stock
previously issued upon conversion of the Series A Preferred Stock or Series B
Preferred Stock or Series C Conversion Price; (3) upon the expiration of any
such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Series A Conversion Price or Series B Conversion Price or
Series C Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall upon such expiration, be recomputed as if: (A)
in the case of Convertible Securities or Options for Common Stock the only
Additional Shares of Common Stock issued were the shares of Common Stock, if
any, actually issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation for the issue of all
such Options, whether or not exercised, plus the consideration actually received
by the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such conversion
or exchange; and (B) in the case of Options for Convertible Securities only the
Convertible Securities, if any, actually issued upon the exercise thereof were
issued at the time of issue of such Options, and the consideration received by
the Corporation for the Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation (determined pursuant to Section
C.4(d)(v)) upon the issue of the Convertible Securities with respect to which
such Options were actually exercised; and (4) no readjustment pursuant to clause
(2) or (3) above shall have the effect of increasing the Series A Conversion
Price or Series B Conversion Price or Series C Conversion Price to an amount
which exceeds the lower of (a) the Series A Conversion Price or Series B
Conversion Price or Series C Conversion Price on the original adjustment date or
(b) the Series A Conversion Price or Series B Conversion Price or Series C
Conversion Price that would have resulted from any issuance of Additional Shares
of Common Stock between the original adjustment date and such readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common
Stock. In the event the Corporation, at any time after the Original Issue Date,
shall issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section C.4(d)(iii)) without
consideration or for a consideration per share less than the Conversion Price
with respect to any series of Preferred Stock in effect on the date of and
immediately prior to such issue, then and in such event, the Conversion Price
for such series of Preferred Stock shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by multiplying the
Conversion Price of the applicable series of Preferred Stock by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price in effect immediately prior to such issuance, and the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such issue plus the number of such Additional Shares of Common Stock so issued.
For the purpose of the above calculation, the number of shares of Common Stock
outstanding immediately prior to such issue shall be calculated on a fully
diluted basis, as if all shares of Series A Preferred Stock and Series B
Preferred Stock and all Convertible Securities had been fully converted into
shares of Common Stock and any other outstanding warrants, options or other
rights for the purchase of shares of stock or convertible securities had been
fully exercised (and the resulting securities fully converted into shares of
Common Stock, if so convertible) as of such date. Notwithstanding the above, the
Series C Conversion Price shall be adjusted by reducing it to the price paid for
each Additional Share of Common Stock so issued. (v) Determination of
Consideration. For purposes of this Section C.4(d), the consideration received
by the Corporation for the issue of any Additional Shares of Common Stock or the
price paid with respect thereto shall be computed as follows: (1) Cash and
Property: Such consideration shall: (A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends; (B) insofar
as it consists of property other than cash, be computed at the fair value
thereof at the time of such issue, as determined in good faith by the Board of
Directors; and (C) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (A) and (B) above, as determined in
good faith by the Board of Directors. (2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section C.4(d)(iii),
relating to Options and Convertible Securities shall be determined by dividing:
(A) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
designed to protect against dilution) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion or exchange of
such Convertible Securities by (B) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against the dilution) issuable
upon the exercise of such Options or conversion or
exchange of such Convertible Securities.
e. Adjustments to Conversion Prices for Stock Dividends and for Combinations or
Subdivisions of Common Stock. In the event that the Corporation at any time or
from time to time after the Original Issue Date shall declare or pay, without
consideration, any dividend on the Common Stock payable in Common Stock or in
any right to acquire Common Stock for no consideration, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by stock split, reclassification or otherwise than by
payment of a dividend in Common Stock or in any right to acquire Common Stock),
or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, then the Series A Conversion Price, Series B Conversion Price
and Series C Conversion Price, each as in effect immediately prior to such event
shall, concurrently with the effectiveness of such event, be proportionately
decreased or increased, as appropriate. In the event that the Corporation shall
declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration, then the Corporation
shall be deemed to have made a dividend payable in Common Stock in an amount of
shares equal to the maximum number of shares issuable upon exercise of such
rights to acquire Common Stock. f. Adjustments for Reclassification and
Reorganization. If the Common Stock issuable upon conversion of the Series A
Preferred Stock or Series B Preferred Stock or Series C Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares provided for in
Section C.4(e) above or a merger or other reorganization referred to in Section
C.2(e) above), the Series A Conversion Price, Series B Conversion Price and
Series C Conversion Price, each as then in effect, shall, concurrently with the
effectiveness of such reorganization or reclassification, be proportionately
adjusted so that the Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall be convertible into, in lieu of the number of
shares of Common Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of stock equivalent
to the number of shares of Common Stock that would have been subject to receipt
by the holders upon conversion of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock immediately before that change. g.
No Impairment. The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section C.4
and in the taking of all such
action as may be necessary or appropriate in order to protect the conversion
rights of the holders of the Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock against impairment. h. Certificates as to
Adjustments. Upon the occurrence of each adjustment or readjustment of any
Series A Conversion Price or Series B Conversion Price or Series C Conversion
Price pursuant to this Section C.4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Series A Preferred Stock Series
B Preferred Stock and Series C Preferred Stock, as the case may be, a
certificate executed by the Corporation's President or Chief Financial Officer
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall, upon
the written request at any time of any holder of Series A Preferred Stock or
Series B Preferred Stock or Series C Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Series A Conversion Price and/or the Series B
Conversion Price and/or the Series C Conversion Price at the time in effect and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of the Series A
Preferred Stock or Series B Preferred Stock or Series C Preferred Stock. i.
Notices of Record Date. In the event that the Corporation shall propose at any
time: (i) to declare any dividend or distribution upon its Common Stock, whether
in cash, property, stock or other securities, whether or not a regular cash
dividend and whether or not out of earnings or earned surplus; (ii) to offer for
subscription pro rata to the holders of any class or series of its stock any
additional shares of stock of any class or series or other rights; (iii) to
effect any reclassification or recapitalization of its Common Stock outstanding
involving a change in the Common Stock; or (iv) to merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all of
its assets, or to liquidate, dissolve or wind up, then in connection with each
such event, the Corporation shall send to the holders of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock: (1) at least ten
(10) days prior written notice of the date on which a record shall be taken for
such dividend, distribution or subscription or for determining the rights to
vote, if any, in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in (iii) and (iv) above, at least ten
(10) days prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event). j. Issue Taxes. The Corporation shall pay any and
all issue and other taxes that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of Series A Preferred
Stock or Series B Preferred Stock or Series C
Preferred Stock pursuant hereto; provided, however, that the Corporation shall
not be obligated to pay any transfer taxes resulting from any transfer requested
by any holder in connection with any such conversion. k. Reservation of Stock
Issuable Upon Conversion. The Corporation 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 Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, the Corporation will take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose, including, without limitation, engaging in best efforts to
obtain the requisite stockholder approval of any necessary amendment to this
Third Amended and Restated Certificate of Incorporation. l. Fractional Shares.
No fractional share shall be issued upon the conversion of any share or shares
of Series A Preferred Stock or Series B Preferred Stock or Series C Preferred
Stock. All shares of Common Stock (including fractions thereof) issuable upon
conversion of more than one share of Series A Preferred Stock or Series B
Preferred Stock or Series C Preferred Stock by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of conversion (as determined in good
faith by the Board of Directors). m. Notices. Any notice required by the
provisions of this Section C.4 to be given to the holders of shares of Series A
Preferred Stock or Series B Preferred Stock or Series C Preferred Stock shall be
deemed given if sent by e-mail or deposited in the mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
Corporation. 5. Restrictions and Limitations. a. As long as the shares of Series
A Preferred Stock constitute at least seven percent (7%) of the outstanding
capital stock of the Corporation (on an as-converted basis), any action or
resolution of (i) the stockholders of the Corporation or (ii) the Board of
Directors (or any committee thereof), as applicable, or of any subsidiary of the
Corporation, regarding any of the following issues, shall require the consent of
the holders of at least fifty percent (50%) of the shares of Series A Preferred
Stock or, if applicable, the director nominated and elected pursuant to the
second sentence of Section C.3(b):
(i) any material change in the nature or character of the business conducted or
proposed to be conducted by the Corporation as proposed in the Corporation's
business plan; (ii) any creation of a class or series of securities with rights,
privileges or preferences equal or superior to those of the shares of Series A
Preferred Stock, except in the context of issuances of securities at a price per
share above the Series A Original Issue Price; and (iii) any liquidation,
dissolution or winding up of the Corporation. b. As long as any shares of Series
B Preferred Stock are outstanding, any action or resolution of (i) the
stockholders of the Corporation or (ii) the Board of Directors (or any committee
thereof), as applicable, or of any subsidiary of the Corporation, regarding any
of the following issues, shall require the consent of the holders of at least a
majority of the shares of Series B Preferred Stock or, if applicable, the
director nominated and elected by the holders of Series B Preferred Stock: (i)
any declaration or payment of any dividends or other distributions on any class
or form of shares; (ii) any repurchase of issued and outstanding shares of the
Company's capital stock other than pursuant to the redemption provisions in
Section C.6; (iii) any material change in the nature or character of the
business conducted or proposed to be conducted by the Corporation as proposed in
the Corporation's business plan; (iv) any entry into any transaction outside the
ordinary course of business with any stockholder, director, officer, parent,
subsidiary or affiliated Corporation or any of their stockholders; (v) any
alteration of the provisions of this Third Amended and Restated Certificate of
Incorporation or Bylaws, including any amendment or a reclassification or a
recapitalization of the outstanding shares of stock of the Corporation which
would change the rights, privileges or preferences attached to the shares of
Series B Preferred Stock; (vi) any issuance of securities, unless such issuance
is in the context of a financing that reflects a pre-money valuation of at least
$80,000,000; (vii) any alteration of signature rights in the Corporation; (viii)
any liquidation, dissolution or winding up of the Corporation; (ix) any merger
or consolidation of the Corporation into or with any other corporation or other
entity, any sale, conveyance or other disposition or encumbrance of all or
substantially all of the Corporation's assets, property or business, or any
recapitalization or reorganization or other transaction or series of related
transactions of the Corporation that effects a greater than 50% change in voting
control of the Corporation; (x) any increase or decrease in the authorized
number of directors of the Corporation from five (5); (xi) any financial
projections, operating budgets and fiscal business plans, and any deviations
therefrom or modifications thereof;
(xii) any creation of a subsidiary of the Corporation; (xiii) any designation or
discharge of the Corporation's auditors if such auditors do not constitute one
of the "Big Five" independent public accounting firms; and (xiv) any designation
or discharge or, if applicable, change in the employment terms of the
Corporation's chairman of the Board of Directors, chief executive officer or any
senior executive officer who reports to the chief executive officer, or any
discharge of any of the founders of the Corporation. c. As long as any shares of
Series C Preferred Stock are outstanding, any action or resolution of (i) the
stockholders of the Corporation or (ii) the Board of Directors (or any committee
thereof), as applicable, or of any subsidiary of the Corporation, regarding any
of the following issues, shall require the consent of the holders of at least a
majority of the shares of Series C Preferred Stock or, if applicable, the each
of the directors nominated and elected by the holders of Series C Preferred
Stock: (i) Issuance of capital stock, rights, options or warrants to purchase
capital stock, or other securities convertible into capital stock, or alteration
of any rights attached to any class of shares in the capital of the Company;
(ii) Any merger, consolidation or acquisition, or the sale, lease or other
disposal of all or substantially all of the Company's assets; (iii) Approval of
the Company's annual operating plan and budget, and any material deviations
there from; (iv) Approval of the opening of new subsidiaries; (v) Approval of
any related party transaction; (vi) Any material change in the business of the
Company; (vii) Any change in the Company's corporate documents; (viii) Any
change in the rules of appointing board members; (ix) Approval of the
appointments of the chairman, CEO, further Board members and any of the senior
executives reporting to the CEO or change of the employment terms for any such
employees. (x) Terms of agreement with the escrow agent appointed according to
Section C.2 (d) (ii).
6. Redemption.
a. The Corporation will, subject to the conditions set forth below, on January
11, 2006 (the "Mandatory Redemption Date"), upon receipt not less than 60 nor
more than 120 days prior to the Mandatory Redemption Date of written request(s)
for redemption from holders of at least a majority in interest of the shares of
Series B Preferred Stock then outstanding (an "Initial Redemption Request"),
redeem from each holder of shares of Series B Preferred Stock that requests
redemption pursuant to the Initial Redemption Request or pursuant to a
subsequent election made in accordance with Section C.6(b) below (a "Requesting
Holder"), at a price per share equal to the Series B Original Issue Price plus
10% per annum from the effective purchase date of the Series B Preferred Stock
through the Mandatory Redemption Date, subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares (the "Mandatory Redemption Price"), the
number of
shares of Series B Preferred Stock requested to be redeemed by each Requesting
Holder. b. The Corporation shall provide notice of its receipt of an Initial
Redemption Request, specifying the time, manner and place of redemption and the
Mandatory Redemption Price (a "Redemption Notice"), by first class or registered
mail, postage prepaid, to each holder of record of Series B Preferred Stock at
the address for such holder last shown on the records of the transfer agent
therefor (or the records of the Corporation, if it serves as its own transfer
agent), not less than 45 days prior to the Mandatory Redemption Date. Each
holder of Series B Preferred Stock (other than a holder who has made the Initial
Redemption Request) may elect to become a Requesting Holder on the Mandatory
Redemption Date by so indicating in a written notice mailed to the Company, by
first class or registered mail, postage prepaid, at least 30 days prior to the
Mandatory Redemption Date. Except as provided in Section C.6(c) below, each
Requesting Holder shall surrender to the Corporation on the Mandatory Redemption
Date the certificate(s) representing the shares to be redeemed on such date, in
the manner and at the place designated in the Redemption Notice. Thereupon, the
Mandatory Redemption Price shall be paid to the order of each such Requesting
Holder and each certificate surrendered for redemption shall be cancelled. c. If
the funds of the Corporation legally available for redemption of Series B
Preferred Stock on the Mandatory Redemption Date are insufficient to redeem the
number of shares of Series B Preferred Stock required under this Section C.6 to
be redeemed on such date from Requesting Holders, those funds which are legally
available will be used to redeem the maximum possible number of such shares of
Series B Preferred Stock ratably on the basis of the number of shares of Series
B Preferred Stock which would be redeemed on such date if the funds of the
Corporation legally available therefor had been sufficient to redeem all shares
of Series B Preferred Stock required to be redeemed on such date. At any time
thereafter when additional funds of the Corporation become legally available for
the redemption of Series B Preferred Stock, such funds will be used, at the end
of the next succeeding fiscal quarter, to redeem the balance of the shares which
the Corporation was theretofore obligated to redeem, ratably on the basis set
forth in the preceding sentence. d. Unless there shall have been a default in
payment of the Mandatory Redemption Price, on the Mandatory Redemption Date all
rights of the holder of each share redeemed on such date as a stockholder of the
Corporation by reason of the ownership of such share will cease, except the
right to receive the Mandatory Redemption Price of such share, upon presentation
and surrender of the certificate representing such share, and such share will
not from and after the Mandatory Redemption Date be deemed to be outstanding. e.
Any Series B Preferred Stock redeemed pursuant to this Section C.6 will be
cancelled and will not under any circumstances be reissued, sold or transferred.
7. Bring-Along Right. Prior to the QIPO, in the event that Stockholders (the
"Proposing Stockholders") holding stock
comprising at least seventy percent (70%) of the Corporation's Series B
Preferred Stock and Series C Preferred Stock (the "Threshold Percent") propose
to transfer their stock to a third party (the "Offeror") pursuant to a merger,
consolidation, reorganization or sale of shares, the remaining Stockholders will
be required to sell their stock to such Offeror at the same price and upon the
same terms and conditions as in the offer made to the Proposing Stockholders or
vote in favor of the transaction, in the case of a merger, consolidation or
reorganization; 8. Pre Emptive Right . Each Stockholder (the "Major Investors")
shall have the right of first refusal to purchase a pro rata share of New
Securities (as defined below) which the Corporation may, from time to time,
propose to sell and issue. A Major Investor's pro rata share, for purposes of
this right of first refusal, is the ratio of the number of shares of Common
Stock owned by such Major Investor immediately prior to the issuance of New
Securities to the total number of shares of Common Stock outstanding immediately
prior to the issuance of New Securities, assuming in each case full conversion
of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock (including those that may be acquired by exercise of the Warrants) and
exercise of all outstanding rights, options and warrants to acquire Common Stock
of the Corporation . Each Major Investor shall have a right of over-allotment
such that if any Major Investor fails to exercise its right hereunder to
purchase its pro rata share of New Securities, the other Major Investors may
purchase the non-purchasing Major Investor's portion on a pro rata basis within
ten (10) days from the date such non-purchasing Major Investor fails to exercise
its right hereunder to purchase its pro rata share of New Securities. This right
of first refusal shall be subject to the following provisions: (a) "New
Securities" shall mean any capital stock (including Common Stock and/or Series A
Preferred Stock and/or Series B Preferred Stock and/or Series C Preferred Stock)
of the Corporation whether now authorized or not, and rights, options or
warrants to purchase such capital stock, and securities of any type whatsoever
that are, or may become, convertible into capital stock; provided that the term
"New Securities" does not include (i) securities issued upon conversion of Loans
outstanding upon adoption of this Third Amended and Restated Certificate of
Incorporation; (ii) securities issued upon conversion of the Series A Preferred
Stock or Series B Preferred Stock or Series C Preferred Stock; (iii) securities
issued upon exercise of warrants and options outstanding upon adoption of this
Third Amended and Restated Certificate of Incorporation; (iv) securities issued
pursuant to the acquisition of another business entity or business segment of
any such entity by the Corporation by merger, purchase of substantially all the
assets or other reorganization whereby the Corporation will own not less than
fifty-one percent (51%) of the voting power of such business entity or business
segment of any such entity; (v) shares of Common Stock issued or issuable to
employees, consultants, officers or directors of the Corporation
pursuant to any stock option, stock purchase or stock bonus plan, agreement or
arrangement approved by the Board of Directors; (vi) securities issued to
vendors or customers or to other persons in similar commercial situations with
the Corporation if such issuance is approved by the Board of Directors; (vii)
securities issued to a strategic investor, if such issuance is approved by the
Board of Directors; (viii) securities issued in a firm commitment underwritten
public offering pursuant to a registration under the Securities Act with an
aggregate offering price to the public in excess of $7.5 million; (ix)
securities issued in connection with any stock split, stock dividend or
recapitalization of the Corporation ; and (x) any right, option or warrant to
acquire any security convertible into the securities excluded from the
definition of New Securities pursuant to subsections (i) through (ix) above. (b)
In the event the Corporation proposes to undertake an issuance of New
Securities, it shall give each Major Investor written notice of its intention,
describing the type of New Securities, and their price and the general terms
upon which the Corporation proposes to issue the same. Each Major Investor shall
have twenty (20) days after any such notice is effective to agree to purchase
such Major Investor's pro rata share of such New Securities for the price and
upon the terms specified in the notice by giving written notice to the
Corporation and stating therein the quantity of New Securities to be purchased.
(c) In the event the Major Investors fail to exercise fully the right of first
refusal within said twenty (20)-day period and after the expiration of the ten
day period for the exercise of the over-allotment provisions of this Section,
the Corporation shall have sixty (60) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within sixty (60) days from the date of said agreement) to
sell the New Securities respecting which the Major Investors' right of first
refusal option set forth in this Section was not exercised, at a price and upon
terms no more favorable to the purchasers thereof than specified in the
Corporation 's notice to the Major Investors pursuant to this Section. In the
event the Corporation has not sold within said 60-day period or entered into an
agreement to sell the New Securities within said 60-day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Corporation shall not thereafter issue or
sell any New Securities, without first again offering such securities to the
Major Investors in the manner provided in this Section.
9. Right of First Refusal. If any Stockholder will sell, assign, transfer,
pledge, hypothecate or otherwise encumber or dispose of in any way ("Transfer"),
all or any part of or any interest in any of his shares, then such Stockholder
shall offer such shares first to any Series C Preferred Stockholder holding more
than 5% of the issues and outstanding share capital of the Corporation ("Offered
Stockholder") at that time by sending written notice (the "Notice") to the
Offered Stockholder, with a copy to the
Corporation and the other stockholders, which shall state (A) the number of
shares proposed to be Transferred (the "Offered Stock"), (B) the identity of the
proposed transferee ("Third Party Purchaser"), (C) the proposed purchase price
per share offered by the Third Party Purchaser (the "Offer Price"), and (D) the
material terms and conditions upon which the proposed Transfer is to be made.
Upon delivery of the Notice, such offer shall be irrevocable unless and until
the rights of first offer provided for herein shall have been waived or shall
have expired. (a) The Offered Stockholders may elect, by written notice to the
selling stockholder and the Corporation delivered within fifteen (15) days after
the giving of the Notice (the "Series C Notice Period"), to purchase any or all
of the Offered Stock at a purchase price equal to the Offer Price and upon the
terms and subject to the conditions set forth in the Notice (the "Series C
Option"). Each Series C Investor shall have the right to purchase that
percentage of the Offered Stock determined by dividing (A) the total number of
shares of stock then owned by such Offered Stockholder by (B) the total number
of shares of stock then owned by all the Offered Stockholders (in each case,
calculated on an as converted to Common Stock basis). The Corporation shall,
within five (5) days of the expiration of the Series C Notice Period, provide
written notice to the fully participating Offered Stockholder indicating the
number of shares of Offered Stock not elected to be purchased by the other
Offered Stockholders (the "Corporation C Option Notice"). If any Offered
Stockholder does not fully subscribe for the number of shares of Offered Stock
such Offered Stockholder is entitled to purchase, then each other fully
participating Offered Stockholder may elect by written notice delivered to the
selling Stockholder and the Corporation within five (5) days of delivery of the
Corporation C Option Notice to purchase that percentage of the remaining Offered
Stock not so subscribed for determined by dividing (x) the total number of
shares of stock then owned by such fully participating Offered Stockholder by
(y) the total number of shares of stock then owned by all fully participating
Offered Stockholders who elected to purchase the remaining Offered Stock (in
each case, on an as converted to Common Stock basis). (b) The failure of a
Offered Stockholder to respond within the Series C Notice Period to the selling
Stockholder and the Company shall be deemed to be a waiver of such Offered
Stockholder's rights under this Section, provided that each Offered Stockholder
may waive its rights under this Section prior to the expiration of the Series C
Notice Period by giving written notice to the selling Stockholder and the
Company. FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power, subject to the provisions
of Section C.5 of Article FOURTH, both before and after receipt of any payment
for any of the Corporation's capital stock, to adopt, amend, repeal or otherwise
alter the Bylaws of the Corporation without any action on the part of the
stockholders; provided, however, that the grant of such power to the Board of
Directors shall not divest the stockholders of nor limit their power, subject to
the provisions of Section C.5
of Article FOURTH, to adopt, amend, repeal or otherwise alter the Bylaws. SIXTH:
Elections of directors need not be by written ballot unless the Bylaws of the
Corporation shall so provide. SEVENTH: The Corporation reserves the right to
adopt, repeal, rescind or amend in any respect any provisions contained in this
Third Amended and Restated Certificate of Incorporation in the manner now or
hereafter prescribed by applicable law, and all rights conferred on stockholders
herein are granted subject to this reservation. EIGHTH: A director of the
Corporation shall, to the full extent permitted by the General Corporation Law
of the State of Delaware as it now exists or as it may hereafter be amended, not
be 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 EIGHTH, nor the adoption of any provision of this Third Amended and
Restated Certificate of Incorporation inconsistent with the Article EIGHTH,
shall eliminate or reduce the effect of this Article EIGHTH in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article EIGHTH, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision. NINTH: Whenever a compromise or
arrangement is proposed between the Corporation and its creditors or any class
of them and/or between the Corporation and its stockholders or any class of
them, any court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of any creditor or
stockholder thereof or on the application of any receiver or receivers appointed
for the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the same compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of the Corporation, as the case
may be, and also on the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Third Amended and Restated
Certificate of Incorporation as of January __, 2003.
M-WISE, INC.
Shay Ben Asulin
Chief Executive Officer