EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTECH PHARMACEUTICALS, INC.
SCRIPTECH PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is ScripTech Pharmaceuticals, Inc. The
corporation was originally incorporated under the same name, and the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on September 17, 1992.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of the Corporation as heretofore supplemented or amended.
3. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
ARTICLE FIRST: The name of the corporation is ScripTech Pharmaceuticals,
Inc. (the "Corporation").
ARTICLE SECOND: The address of the registered office of the Corporation in
the State of Delaware shall be 1209 Orange Street, Wilmington, Delaware 19801
and the name of its registered agent at such address shall be The Corporation
Trust Company.
ARTICLE 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.
ARTICLE FOURTH: Capital Stock.
The total number of shares which the Corporation shall have authority to
issue is (i) Fifteen Million (15,000,000) shares of Common Stock, with a par
value of one cent ($.01) per share (the "Common Stock"), and (ii) Six Million
Two Hundred Fifty
Thousand (6,250,000) shares of Series A Preferred Stock, with a par value of one
cent ($.0l) per share (the "Preferred Stock").
(a) Common Stock.
Section 1. Voting Rights. Except as otherwise required by law, and subject
in all cases to the provisions of Section 4 of subpart (b) to this ARTICLE
FOURTH, the holders of the Common Stock will be entitled to one vote per share
on all matters to be voted on by the Corporation's stockholders.
Section 2. Dividends. When and as dividends are declared on shares of
Common Stock, whether payable in cash, property or securities of the
Corporation, the holders of Common Stock and the holders of Preferred Stock will
be entitled to share ratably in such dividends (with each share of Preferred
Stock being treated for purposes of such dividend as the number of shares of
Common Stock into which such share of Preferred Stock could then be converted).
Section 3. Registration of Transfer. The Corporation will keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender of
any certificate representing shares of Common Stock at such place, the
Corporation will, at the request of the registered holder of such certificate,
execute and deliver a new certificate or certificates in exchange therefor
representing in the aggregate the number of shares represented by the
surrendered certificate, and the Corporation forthwith will cancel such
surrendered certificate. Each such new certificate will be registered in such
name and will represent such number of shares of such class as is requested by
the holder of the surrendered certificate and will be substantially identical in
form to the surrendered certificate.
Section 4. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation of the ownership and the loss, theft, destruction or
mutilation of any certificate evidencing one or more shares of Common Stock, and
in the case of any such loss, theft or destruction, upon receipt of indemnity
and bond reasonably satisfactory to the Corporation, or, in the case of any such
mutilation upon surrender of such certificate, the Corporation will execute and
deliver in lieu of such certificate a new certificate of like kind representing
the number of shares represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 5. Residual Rights. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
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(b) Preferred Stock.
Section l. Dividends. The holders of the Preferred Stock shall be entitled
to receive, when and as declared by the Board of Directors out of the funds of
the Corporation legally available therefor, cash dividends at the annual rate of
$0.10 per share of Preferred Stock, payable annually on the last day of December
in each year beginning December 31, 1993. The initial dividend paid after the
date of original issuance of any shares of the Preferred Stock shall accrue from
such date of issuance on a pro rata basis. Dividends payable for any period less
than a full year shall be computed on the basis of a 360-day year with 12 equal
months of 30 days. Dividends shall be payable to holders of record, as they
appear on the stock books of the Corporation on such record dates as may be
declared by the Board of Directors, not more than sixty (60) days nor less than
ten (10) days preceding the payment dates of such dividends. If the dividend on
the Preferred Stock is not paid in full, the aggregate deficiency shall not
cumulate, but shall be fully paid or set apart for payment before any dividends
shall be paid or set apart for, or any other distributions paid, or any payments
made on account of the purchase, redemption or retirement of any other
securities of the Corporation.
Section 2. Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, then, before any payment shall be
made to or set apart for the holders of Common Stock or the holders of any other
shares of capital stock of the Corporation ranking upon liquidation junior to
the Preferred Stock, the holders of shares of Preferred Stock shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its stockholders, a per-share cash amount equal to $1.00 (such amount to be
appropriately adjusted in the event of any stock dividend, stock split or
combination, or similar recapitalization of the Corporation's capital stock)
plus, in the case of each share, a cash amount equal to any declared but unpaid
dividends thereon (the "Preferred Stock Liquidation Preference"). If, upon any
such liquidation, dissolution or winding up of the Corporation, the assets of
the Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Preferred Stock the full amount to
which they shall be entitled, the holders of Preferred Stock shall share ratably
in any distribution of assets of the Corporation in proportion to the respective
amounts which would otherwise be payable in respect of the Preferred Stock
Liquidation Preference if all amounts payable on or with respect to said shares
were paid in full.
(b) Any assets of the Corporation remaining after the payments
specified in paragraph (a) above shall be distributed with respect to the
outstanding shares of Preferred Stock (each share of which shall be treated for
purposes of this distribution as the number of shares of Common Stock into which
such share could then be converted) and Common Stock pro rata without regard to
class.
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(c) For purposes of this Section 2, if any assets distributed
to stockholders upon liquidation of the Corporation consist of property other
than cash, the amount of such distribution shall be deemed to be the fair market
value thereof at the time of such distribution, as determined in good faith by
the Board of Directors of the Corporation.
Section 3. Reorganization.
(a) In the event of a Reorganization (as defined below), each
holder of Preferred Stock shall have the option to either (i) convert his or its
shares of Preferred Stock into Common Stock in accordance with the terms and
provisions of Section 5 of this ARTICLE FOURTH, subpart (b), or (ii) have the
Corporation redeem his or its shares of Preferred Stock in exchange for the
Preferred Stock Liquidation Preference, as hereinafter provided in Section 3(c)
below. For purposes of this Section 3, "Reorganization" shall mean any merger or
consolidation of the Corporation into or with any other corporation or entity,
or a sale, conveyance, mortgage, transfer, license, pledge, lease or other
disposition of all or substantially all of the assets of the Corporation, unless
the stockholders of the Corporation immediately prior thereto shall, immediately
thereafter, hold as a group the right to cast not less than 75% of the votes of
all holders of voting securities of the resulting or surviving corporation or
entity on any matter on which any such holders of voting securities shall be
entitled to vote, in which case, such event shall not be deemed to be a
Reorganization for the purposes of this Section 3.
(b) All holders of record of shares of Preferred Stock will be
given at least 20 but not more than 60 days' prior written notice of the
Reorganization and the date fixed (the "Option Date") and the place designated
for conversion or redemption pursuant to this Section 3. Such notice will be
sent by registered mail, return receipt requested, to each record holder of
Preferred Stock at such holder's address last shown on the records of the
transfer agent for the Preferred Stock (or the records of the Corporation if it
serves as its own transfer agent). Each holder of Preferred Stock shall give
written notice to the Corporation of his or its election (i) to convert his or
its shares of Preferred Stock into Common Stock or (ii) to receive the Preferred
Stock Liquidation Preference, at least 3 days prior to the Option Date. If the
Corporation has not received notice of such election prior to such three-day
period, such holder shall be deemed to have elected to convert his or its shares
of Preferred Stock into Common Stock in accordance with the terms and provisions
of Section 5 of this ARTICLE FOURTH, subpart (b).
(c) If an election to receive the Preferred Stock Liquidation
Preference is made, on or before the Option Date, each holder of shares of
Preferred Stock making such election shall surrender his or its certificate or
certificates for all such shares to the Corporation at the place designated in
such notice. If required by the Corporation, certificates surrendered for
redemption shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory
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to the Corporation, duly executed by the registered holder or his or its
attorney duly authorized in writing. On the Option Date and upon the surrender
of the certificate or certificates representing shares of Preferred Stock, the
Corporation shall pay in full to such holder the Preferred Stock Liquidation
Preference with respect to such shares of Preferred Stock. On and after the
Option Date, all rights with respect to such holders of Preferred Stock who
elected to receive the Preferred Stock Liquidation Preference, including the
rights, if any, to receive notices and vote, will terminate, except only the
rights of the holders thereof, upon surrender of their certificate or
certificates therefor, to receive payment of the Preferred Stock Liquidation
Preference as aforesaid.
(d) All certificates evidencing shares of Preferred Stock
which are required to be surrendered in accordance with this Section 3 shall,
from and after the Option Date, be deemed to have been retired and canceled and
the shares of Preferred Stock represented thereby for all purposes shall also be
deemed retired and canceled, and shall not be reissued, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. The Corporation may thereafter take such appropriate action
as may be necessary to reduce accordingly the authorized number of shares of
Preferred Stock.
(e) Notwithstanding anything to the contrary contained in this
Section 3, unless the holders of Preferred Stock shall otherwise notify the
Corporation, no such holder shall be deemed to have elected to convert his or
its shares of Preferred Stock into Common Stock or redeemed his or its shares of
Preferred Stock, as the case may be, as a result of a Reorganization, and no
such conversion or redemption shall be effective, unless and until the
Reorganization referred to in the notice given to holders of record of Preferred
Stock pursuant to Section 3(b) hereof shall have been consummated.
Section 4. Voting.
(a) Each holder of outstanding shares of Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Preferred Stock held by such holder are
convertible (as adjusted from time to time pursuant to Section 5 of this ARTICLE
FOURTH, subpart (b)) at the record date for the determination of stockholders
entitled to vote on such matters, or if no such record date is established, at
the date such vote is taken or written consent solicited, at each meeting of
stockholders of the Corporation (and written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Corporation for their action or consideration. Except as provided by law, by
the provisions of paragraphs (b), (c) and (d) below or by the provisions
establishing any other series of Preferred Stock or Common Stock, holders of
Preferred Stock shall vote together with the holders of Common Stock and any
other class or series of stock as a single class.
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(b) The Corporation shall not, without the written consent or
affirmative vote of the holders of greater than 50% of the then outstanding
shares of Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class:
(i) merge with or into or consolidate with any other
corporation, or sell, lease, license or otherwise dispose of all or
substantially all of its properties or assets;
(ii) amend, alter or repeal the preferences, special
rights or other powers of the Preferred Stock or otherwise amend, alter or
repeal any provision of this Certificate of Incorporation, in either such case,
so as to affect adversely the Preferred Stock;
(iii) directly or indirectly redeem, purchase or
otherwise acquire any of the Corporation's equity securities, other than
pursuant to any stock option or agreement entered into by the Corporation and
approved by the directors designated by the holders of Preferred Stock, as
provided in paragraph (d) below;
(iv) directly or indirectly declare or pay any dividends
or make any distributions upon any of its equity securities, other than the
Preferred Stock;
(v) authorize, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any securities having
equity features and which rank on a parity with or senior to the Preferred Stock
upon payment of dividends or upon liquidation or other distribution of assets or
with a conversion price lower than that of the Preferred Stock or terms more
favorable than those of the Preferred Stock;
(vi) make any amendment to the Corporation's By-Laws, or
file any resolution of the board of directors with the Secretary of State of the
State of Delaware containing any provisions, which would adversely affect or
otherwise impair the rights of the holders of the Preferred Stock or the Common
Stock issued or issuable upon conversion of the Preferred Stock; or
(vii) other than the issuance of the Preferred Stock
issued in accordance with the Stock Purchase Agreement, dated on or about August
__, 1993, between the Corporation and the Purchasers named therein (the "Stock
Purchase Agreement"), enter into any transaction the effect of which shall (x)
cause the beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of 20% or more of the
combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors to be held
by any individual, entity or two or more individuals or entities who agree to
act in concert or (y) cause the individuals who constituted the
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Corporation's Board of Directors on the date immediately succeeding the date at
which shares of Preferred Stock were first issued, to cease to constitute at
least a majority of such Board, or (z) otherwise result in a change in control
of the Corporation; or
(viii) liquidate, dissolve or effect a recapitalization
or reorganization in any form of transaction.
(c) Notwithstanding the provisions of paragraph (b) above,
until the second anniversary of the issuance of the Preferred Stock pursuant to
the Stock Purchase Agreement, the Corporation shall not, without the written
consent or affirmative vote of all the holders of Preferred Stock, given in
writing or by vote at a meeting, consenting or voting (as the case may be) as a
separate class:
(i) merge with or into or consolidate with any other
corporation, or sell, lease, license or otherwise dispose of all or
substantially all of its properties or assets; or
(ii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction.
(d) The holders of the Preferred Stock (i) shall have the
right to designate the nomination of three individuals to serve on the
Corporation's Board of Directors, one of whom shall initially be Barry Weinberg,
and the Corporation shall use its best efforts to cause the election of such
individuals as directors and (ii) shall have additional rights with respect to
the election of directors, as more fully described in the Stock Purchase
Agreement.
Section 5. Optional Conversion. The holders of Preferred Stock shall have
conversion rights as follows:
(a) Right to Convert.
(i) Each share of Preferred Stock shall be convertible,
at the option of the holder thereof, at any time and from time to time into the
number of fully paid and nonassessable shares of Common Stock of the Corporation
as is determined by dividing $1.00 by the Current Conversion Price (as defined
in paragraph (c) below) in effect at the time of conversion. The conversion
price at which shares of Common Stock shall be deliverable upon conversion of
Preferred Stock without the payment of additional consideration by the holder
thereof shall initially be $1.00, subject to adjustment as provided in paragraph
(c) below.
(ii) No fractional shares of Common Stock shall be
issued upon conversion of shares of Preferred Stock. In lieu of any fractional
share to which the holder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being
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converted, the Corporation shall pay cash equal to such fraction multiplied by
the then Current Conversion Price.
(b) Mechanics of Conversion.
(i) In order for a holder of Preferred Stock to convert
shares of Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Preferred Stock, at
the office of the transfer agent for the Preferred Stock (or at the principal
office of the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or any
number of the shares of Preferred Stock represented by such certificate or
certificates. Such notice shall state such holder's name or the names of the
nominees in which such holder wishes the certificate or certificates for shares
of Common Stock to be issued. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or his or its attorney duly authorized in
writing. The date of receipt of such certificates and notice by the transfer
agent (or by the Corporation if the Corporation serves as its own transfer
agent) shall be the conversion date (the "Conversion Date"). The Corporation
shall, as soon as practicable after the Conversion Date, issue and deliver at
such office to such holder of Preferred Stock, or to his or its nominees, a
certificate or certificates for the number of whole shares of Common Stock (and
any shares of Preferred Stock represented by the certificate or certificates
delivered to the Corporation by the holder thereof which are not converted into
Common Stock) issuable upon such conversion in accordance with the provisions
hereof, together with cash in lieu of fractional shares calculated in accordance
with subparagraph (ii) of paragraph (a) above. Such conversion shall be deemed
to have been made immediately prior to the close of business on the date of such
surrender of certificates of Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on that date.
(ii) The Corporation shall at all times when the
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Preferred Stock, such number of its duly authorized shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock. Before taking any action which would
cause Common Stock, upon the conversion of Preferred Stock, to be issued below
the then par value of the shares of Common Stock, the Corporation will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Corporation may validly and legally issue fully paid and nonassessable
shares of Common Stock to the holders of Preferred Stock. The Corporation will
not close its books against the transfer of the Preferred Stock or of Common
Stock issued or issuable upon conversion of the Preferred Stock in any manner
which interferes with the timely conversion of the Preferred Stock.
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(iii) All shares of Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor and payment of any declared and
unpaid dividends thereon. On and as of the Conversion Date, the shares of Common
Stock issuable upon such conversion shall be deemed to be outstanding, and the
holder thereof shall be entitled to exercise and enjoy all rights with respect
to such shares of Common Stock, including the rights, if any, to receive notices
and to vote. All certificates representing shares of Preferred Stock, from and
after the Conversion Date, shall be deemed to have been retired and canceled and
shall not be reissued, and the Corporation may thereafter take such appropriate
action as may be necessary to reduce accordingly the authorized number of shares
of Preferred Stock.
(c) Adjustments to Conversion Price. The initial conversion
price as stated in subparagraph (i) of paragraph (a) above shall be subject to
adjustment from time to time and such conversion price as adjusted shall
likewise be subject to further adjustment, all as hereinafter set forth. The
term "Current Conversion Price" shall mean, as of any time, the conversion price
of the Preferred Stock at that time, as specified in paragraph (a) above in case
no adjustment shall have been required, or such conversion price as adjusted
pursuant to this paragraph (c), as the case may be.
(i) If at any time after the date of issuance of the
Preferred Stock the Corporation shall issue (x) any shares of Common Stock other
than (A) Excluded Stock (as defined in subparagraph (vii) below), (B) Common
Stock issued or issuable upon conversion of the Preferred Stock or (C) by way of
dividend or other distribution on shares of Common Stock referred to in the
foregoing clauses (A) and (B), or (y) any shares of a class or series
convertible into Common Stock, other than the Preferred Stock (collectively,
with the Common Stock, such "Securities"), for a consideration per share (the
consideration in each case to be determined in the manner provided in (E) and
(F) of subparagraph (ii) below) less than the Current Conversion Price in effect
immediately prior to the issuance of such Securities, the Current Conversion
Price in effect immediately prior to each such issuance shall forthwith (except
as provided in subparagraph (ii) below) be adjusted to a Current Conversion
Price obtained by dividing an amount equal to the sum of
(x) the total number of shares of Common Stock outstanding
(including the number of shares of Common Stock into
which the outstanding shares of Preferred Stock and
other securities convertible into Preferred Stock are
then directly or indirectly convertible) immediately
prior to such issuance multiplied by the Current
Conversion Price in effect immediately prior to such
issuance, plus
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(y) the consideration received by the Corporation upon such
issuance,
by
(z) the total number of shares of Common Stock outstanding
(including the number of shares of Common Stock into
which the outstanding shares of Preferred Stock or other
securities convertible into Preferred Stock are then
directly or indirectly convertible) immediately after
such issuance (including the number of shares of Common
Stock into which such newly issued Securities are then
convertible).
(ii) For the purpose of any adjustment of the Conversion
Price pursuant to subparagraph (c)(i) above, the following provisions shall be
applicable:
(A) In the case of the issuance of options or warrants to purchase or
rights to subscribe for Common Stock other than Excluded Stock
(collectively, "Rights"), the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such Rights shall be
deemed to have been issued at the time such Rights were issued, for
a consideration equal to the consideration (determined in the manner
provided in (E) and (F) below), if any, received by the Corporation
upon the issuance of such Rights, plus the minimum purchase price
provided in such Rights for the Common Stock covered thereby;
provided that such shares of Common Stock deliverable upon the
exercise of such Rights shall not be deemed to have been issued
unless such consideration per share would be less than the Current
Conversion Price in effect on the date of and immediately prior to
such issue. No further adjustment of the Current Conversion Price
adjusted upon the issuance of such Rights shall be made as a result
of the actual issuance of shares of Common Stock deliverable upon
exercise of such Rights.
(B) In the case of the issuance of securities by their terms convertible
into or exchangeable for Common Stock other than Excluded Stock
(collectively, "Convertible Securities"), or options or warrants to
purchase or rights to subscribe for securities by their terms
convertible or exchangeable for Common Stock other than Excluded
Stock (collectively, "Related Rights"), the aggregate maximum number
of shares of Common Stock deliverable upon conversion, exchange or
exercise of any such Convertible Securities or such Related Rights
shall be deemed to have been issued at the time such Convertible
Securities or such Related Rights were issued and for a
consideration equal to the consideration received by the Corporation
upon issuance of such Convertible Securities or such Related Rights
(excluding
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any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be
received by the Corporation upon the conversion, exchange or
exercise of such Convertible Securities or Related Rights (the
consideration in each case to be determined in the manner provided
in (E) and (F) below); provided that such shares of Common Stock
deliverable upon such conversion, exchange or exercise of such
Convertible Securities or Related Rights shall not be deemed to have
been issued unless such consideration per share would be less than
the Current Conversion Price in effect on the date of and
immediately prior to such issue. No further adjustment of the
Current Conversion Price adjusted upon the issuance of such Related
Rights shall be made as a result of the actual issuance of such
Convertible Securities deliverable upon exercise of such Related
Rights.
(C) On any change in the number of shares of Common Stock deliverable
upon the exercise of such Rights or Related Rights or upon the
conversion, exchange or exercise of such Convertible Securities or
on any change in the minimum purchase price of such Rights, Related
Rights or Convertible Securities other than a change resulting from
the anti-dilution provisions of such Rights, Related Rights or
Convertible Securities, the Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have been
obtained had the adjustment made upon the issuance of such Rights,
Related Rights or Convertible Securities not converted, exchanged or
exercised prior to such change, been made upon the basis of such
change.
(D) On the expiration of any such Rights, Related Rights or Convertible
Securities, the Current Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have obtained
had the adjustment made upon the issuance of such Rights or Related
Rights or the conversion, exchange or exercise of any such
Convertible Securities been made upon the basis of the issuance of
only the number of shares of Common Stock actually issued upon the
exercise of such Rights or Related Rights or the conversion,
exchange or exercise of any such Convertible Securities.
(E) In the case of the issuance of such Securities for cash, the
consideration shall be deemed to be the amount of cash paid therefor
(excluding amounts paid for accrued interest or accrued dividends).
(F) In the case of the issuance of such Securities for a consideration
in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in
good faith by the Board of Directors of the Corporation.
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(iii) If the Corporation declares a dividend or other
distribution payable in such Securities or subdivides its outstanding shares of
Common Stock into a larger number or combines its outstanding shares of Common
Stock into a smaller number, then the Current Conversion Price in effect
immediately prior to such dividend, other distribution, subdivision or
combination, as the case may be, shall forthwith be adjusted to that price
determined by multiplying the Current Conversion Price by a fraction (x) the
numerator of which shall be the total number of outstanding shares of such
Securities immediately prior to such dividend, other distribution, subdivision
or combination and (y) the denominator of which shall be the total number of
outstanding shares of such Securities immediately after such dividend, other
distribution, subdivision or combination.
(iv) In case the Corporation shall declare a dividend or
otherwise distribute to the holders of its Common Stock shares of its capital
stock (other than such Securities), stock or other securities of other persons,
evidences of indebtedness issued by the Corporation or other persons, assets
(excluding cash dividends) or options, warrants or rights (excluding such Rights
or Related Rights), then, in each such case, immediately following the record
date fixed for the determination of the holders of Common Stock entitled to
receive such dividend or distribution, the Current Conversion Price in effect
thereafter shall be determined by multiplying the Current Conversion Price in
effect immediately prior to such record date by a fraction (A) the numerator of
which shall be an amount equal to the remainder of (x) the Current Market Price
(as defined in subparagraph (viii) below) determined immediately prior to such
distribution of one share of Common Stock less (y) the fair value (as determined
in good faith by the Corporation's Board of Directors) of the stock, securities,
evidences of indebtedness, assets, options, warrants or rights so dividended or
distributed in respect of one share of Common Stock, as the case may be, and (B)
the denominator of which shall be the Current Market Price of one share of
Common Stock determined immediately prior to such dividend or distribution. Such
adjustment shall be made on the date such dividend or distribution is made, and
shall become effective at the opening of business on the business day following
the record date for the determination of stockholders entitled to such dividend
or distribution.
(v) In the event the Corporation is in arrears with respect to
the payment of any dividend or portion thereof declared but unpaid on shares of
Preferred Stock, at the time a holder elects to convert such shares of Preferred
Stock, the Current Conversion Price in effect immediately prior to such
conversion shall forthwith be reduced (but only with respect to the shares of
Preferred Stock being so converted) by an amount equal to the quotient of (x)
the aggregate arrearage per share of Preferred Stock being converted, divided by
(y) the number of shares of Common Stock into which such share of Preferred
Stock being converted is then convertible; provided, however, that the
application of the foregoing shall not reduce the Current Conversion Price below
$.01.
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(vi) Whenever the Current Conversion Price shall be adjusted
as provided in this Section 5, the Corporation shall forthwith file, at the
office of the transfer agent for the Preferred Stock, at the principal office of
the Corporation or at such other place as may be designated by the Corporation,
a statement, certified by the chief financial officer of the Corporation,
showing in detail the facts requiring such adjustment and the Current Conversion
Price that shall be in effect after such adjustment. The Corporation shall also
cause a copy of such statement to be sent by first class mail, postage prepaid,
to each holder of record of Preferred Stock at such holder's address as shown in
the records of the Corporation.
(vii) As used in this paragraph (c), "Excluded Stock" shall
mean (x) up to [3,200,000] shares (such amount to be appropriately adjusted in
the event of any stock dividend, stock split or combination, or similar
recapitalization affecting the Common Stock) of Common Stock or options for the
purchase thereof issued, sold or granted, in the past or future, by the
Corporation to its employees, directors or consultants pursuant to bona fide
employee stock purchase, option or similar benefit plans or other incentive
programs or compensation arrangements approved by the Board of Directors of the
Corporation, as more fully detailed in Section 7.14 of the Stock Purchase
Agreement.
(viii) For the purpose of any computation pursuant to
subparagraph (iv) above, the "Current Market Price" at any date of one share of
Common Stock shall be deemed to be the average of the daily closing prices for
the 30 consecutive business days ending 15 business days before the date in
question (as adjusted for any stock splits, stock dividends, combinations or
recapitalization that took effect during such 30 business-day period). The
closing price for each day shall be the last reported sales price on such day on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading, or if not listed or admitted to trading on any national
securities exchange, the average of the last reported bid and asked prices as
reported by the National Association of Securities Dealers Automated Quotation
System, Inc., all as adjusted for stock splits, stock dividends, combinations or
similar recapitalization that took effect during such 30 business-day period;
provided, however, that if the Common Stock is not traded in such a manner that
the quotations referred to in this subparagraph (viii) are available for the
period required hereunder, the Current Market Price shall be deemed to be the
fair value of such Common Stock as determined in good faith by the Board of
Directors of the Corporation.
(ix) If any event occurs of the type contemplated by the
provisions of this Section 5 but not expressly provided for by such provisions,
then the Corporation's Board of Directors will make an appropriate adjustment in
the Current Conversion Price so as to protect the rights of the holders of the
Preferred Stock; provided that no such adjustment will increase the Current
Conversion Price except as otherwise permitted pursuant to subparagraph (iii)
above or subparagraph (c)(ii)(D) of this Section 5 or decrease the number of
shares of Common Stock issuable upon conversion.
-13-
Section 6. Mandatory Conversion.
(a) Upon the earlier to occur of (i) the consummation of an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale by the
Corporation of Common Stock to the public at a minimum price per share of $5.00
resulting in aggregate gross proceeds to the Corporation of not less than
$7,500,000, and (ii) the written consent or affirmative vote of the holders of
not less than 66-2/3% of the then outstanding shares of Preferred Stock, given
in writing or by vote at a meeting, all shares of Preferred Stock then
outstanding shall automatically be converted into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $1.00 by the
Current Conversion Price then in effect pursuant to Section 5 of this ARTICLE
FOURTH, subpart (b).
(b) No fractional shares of Common Stock shall be issued upon
conversion of shares of Preferred Stock. In lieu of any fractional share to
which the holder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being converted, the Corporation shall pay cash equal to
such fraction multiplied by the then Current Conversion Price.
(c) All holders of record of shares of Preferred Stock will be given
at least 10 but not more than 30 days' prior written notice of the date fixed
(the "Mandatory Conversion Date") and the place designated for mandatory
conversion of all shares of Preferred Stock pursuant to this Section 6. Such
notice will be sent by first class or registered mail, postage prepaid, to each
record holder of Preferred Stock at such holder's address last shown on the
records of the transfer agent for the Preferred Stock (or the records of the
Corporation if it serves as its own transfer agent). On or before the Mandatory
Conversion Date, each holder of shares of Preferred Stock shall surrender his or
its certificate or certificates for all such shares to the Corporation at the
place designated in such notice. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or his or its attorney duly authorized in
writing. On and after the Mandatory Conversion Date, all rights with respect to
the Preferred Stock, including the rights, if any, to receive notices and vote,
will terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Preferred Stock has been
converted and payment of any declared but unpaid dividends thereon. As soon as
practicable after the Mandatory Conversion Date and upon the surrender of the
certificate or certificates representing shares of Preferred Stock, the
Corporation shall issue and deliver to such holder, or on his or its written
order, a certificate or certificates for the number of whole shares of Common
Stock issuable under such conversion in accordance with the provisions hereof,
together with cash as provided in
-14-
subparagraph (b) of this Section 6 in respect of any fraction of a share of
Common Stock otherwise issuable upon such conversion.
(d) All certificates evidencing shares of Preferred Stock which are
required to be surrendered in accordance with this Section 6, from and after the
Mandatory Conversion Date, shall be deemed to have been retired and canceled,
and the shares of Preferred Stock represented thereby, converted into Common
Stock, notwithstanding the failure of the holder or holders thereof to surrender
such certificates on or prior to such date. The Corporation may thereafter take
such appropriate action as may be necessary to reduce accordingly the authorized
number of shares of Preferred Stock.
Section 7. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder will be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing one or more shares of Preferred Stock, and in the case of
any such loss, theft or destruction, upon receipt of indemnity and bond
reasonably satisfactory to the Corporation (provided that if the holder is an
institutional investor its own agreement will be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation will
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
ARTICLE FIFTH: The Corporation is to have perpetual existence.
ARTICLE SIXTH: In addition to, and not by way of limitation of, the powers
granted to the Board of Directors by the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal all or any of the by-laws of the Corporation.
ARTICLE SEVENTH: Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall so provide.
ARTICLE EIGHTH: Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the by-laws of the Corporation.
ARTICLE 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 this Corporation or of any creditor or stockholder thereof or on the
application of any
-15-
receiver or receivers appointed for this Corporation under the provisions of
ss.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 ss.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 said
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.
ARTICLE TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute and by this Restated Certificate
of Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
ARTICLE ELEVENTH: To the fullest extent permitted by the General
Corporation Law of the State of Delaware as it now exists or may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation, any of its stockholders or any other person or entity for monetary
damages for breach of fiduciary duty owed to the Corporation, its stockholders
or such other person or entity owing to such director's position as a director
of the Corporation. Any repeal or modification of this ARTICLE ELEVENTH by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE TWELFTH: Section 1. Actions, Suits and Proceedings Other Than By
or in the Right of the Corporation. The Corporation shall indemnify each person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was, or has agreed to become,
a director or officer of the Corporation, or is or was serving, or has agreed to
serve, at the request of the Corporation, as a director, officer or trustee of,
or in a similar capacity with, another corporation, partnership, joint venture,
trust or other enterprise (including any employee benefit plan) (all such
persons being referred to hereafter as an "Indemnitee"), or by reason of any
action alleged to have been taken or omitted to have been taken in such
capacity, against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such action, suit or proceeding and any appeal
therefrom, if he acted
-16-
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in, or not opposed to,
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Notwithstanding anything to the contrary in this ARTICLE TWELFTH, except as set
forth in Section 6 below, the Corporation shall not indemnify an Indemnitee
seeking indemnification in connection with a proceeding (or part thereof)
initiated by the Indemnitee unless the initiation thereof was approved by the
Board of Directors of the Corporation.
Section 2. Actions or Suits By or in the Right of the Corporation. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan), or by reason of any
action alleged to have been taken or omitted to have been taken in such
capacity, against all expenses (including attorneys' fees) and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses (including attorneys' fees) which the Court of
Chancery of Delaware or such other court shall deem proper.
Section 3. Indemnification for Expenses of Successful Party.
Notwithstanding the other provisions of this ARTICLE TWELFTH, to the extent that
an Indemnitee has been successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this ARTICLE
TWELFTH, or in defense of any claim, issue or matter therein, or on appeal from
any such action, suit or proceeding, he shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him or
on his behalf in connection therewith. Without limiting the foregoing, if any
action, suit or proceeding is disposed of, on the merits or otherwise (including
a disposition without prejudice), without (i) the disposition being adverse to
-17-
the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the
Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv)
an adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and (v) with respect to any criminal proceeding, an adjudication
that the Indemnitee had reasonable cause to believe his conduct was unlawful,
the Indemnitee shall be considered for the purposes hereof to have been wholly
successful with respect thereto.
Section 4. Notification and Defense of Claim. As a condition precedent to
his right to be indemnified, the Indemnitee must notify the Corporation in
writing as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of which the Corporation is so
notified, the Corporation will be entitled to participate therein at its own
expense and/or to assume the defense thereof at its own expense, with legal
counsel reasonably acceptable to the Indemnitee. After notice from the
Corporation to the Indemnitee of its election so to assume such defense, the
Corporation shall not be liable to the Indemnitee for any legal or other
expenses subsequently incurred by the Indemnitee in connection with such claim,
other than as provided below in this Section 4. The Indemnitee shall have the
right to employ his own counsel in connection with such claim, but the fees and
expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of the Indemnitee
unless (i) the employment of counsel by the Indemnitee has been authorized by
the Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel for the Indemnitee shall be at the expense of the Corporation, except
as otherwise expressly provided by this ARTICLE TWELFTH. The Corporation shall
not be entitled, without the consent of the Indemnitee, to assume the defense of
any claim brought by or in the right of the Corporation or as to which counsel
for the Indemnitee shall have reasonably made the conclusion provided for in
clause (ii) above.
Section 5. Advance of Expenses. Subject to the provisions of Section 6
below, in the event that the Corporation does not assume the defense pursuant to
Section 4 of this ARTICLE TWELFTH of any action, suit, proceeding or
investigation of which the Corporation receives notice under this ARTICLE
TWELFTH, any expenses (including attorneys' fees) incurred by an Indemnitee in
defending a civil or criminal action, suit, proceeding or investigation or any
appeal therefrom shall be paid by the Corporation in advance of the final
disposition of such matter, provided, however, that the payment of such expenses
incurred by an Indemnitee in advance of the final disposition of such matter
shall be made only upon receipt of an undertaking by or on behalf of the
Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
by the Corporation as authorized in this ARTICLE TWELFTH. Such undertaking may
be
-18-
accepted without reference to the financial ability of such person to make such
repayment.
Section 6. Procedure for Indemnification. In order to obtain
indemnification or advancement of expenses pursuant to Section 1, 2, 3 or 5 of
this ARTICLE TWELFTH, the Indemnitee shall submit to the Corporation a written
request, including in such request such documentation and information as is
reasonably available to the Indemnitee and is reasonably necessary to determine
whether and to what extent the Indemnitee is entitled to indemnification or
advancement of expenses. Any such indemnification or advancement of expenses
shall be made promptly, and in any event within 60 days after receipt by the
Corporation of the written request of the Indemnitee, unless with respect to
requests under Section 1, 2 or 5 the Corporation determines, by clear and
convincing evidence, within such 60-day period, that the Indemnitee did not meet
the applicable standard of conduct set forth in Section 1 or 2, as the case may
be. Such determination shall be made in each instance by (a) a majority vote of
a quorum of the directors of the Corporation consisting of persons who are not
at that time parties to the action, suit or proceeding in question
("disinterested directors"), (b) if no such quorum is obtainable, a majority
vote of a committee of two or more disinterested directors, (c) a majority vote
of a quorum of the outstanding shares of stock of all classes entitled to vote
for directors, voting as a single class, which quorum shall consist of
stockholders who are not at that time parties to the action, suit or proceeding
in question, (d) independent legal counsel (who may be regular legal counsel to
the Corporation) or (e) a court of competent jurisdiction.
Section 7. Remedies. The right to indemnification or advances as granted
by this ARTICLE TWELFTH shall be enforceable by the Indemnitee in any court of
competent jurisdiction if the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within the 60-day period referred to
above in Section 6. Unless otherwise provided by law, the burden of proving that
the Indemnitee is not entitled to indemnification or advancement of expenses
under this ARTICLE TWELFTH shall be on the Corporation. Neither the failure of
the Corporation to have made a determination prior to the commencement of such
action that indemnification is proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the Corporation pursuant to Section 6 that the Indemnitee has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the Indemnitee has not met the applicable standard of
conduct. The Indemnitee's expenses (including attorneys' fees) incurred in
connection with successfully establishing his right to indemnification, in whole
or in part, in any such proceeding shall also be indemnified by the Corporation.
Section 8. Subsequent Amendment. No amendment, termination or repeal of
this ARTICLE TWELFTH or of the relevant provisions of the General Corporation
Law of the State of Delaware or any other applicable laws shall affect or
diminish in any way the rights of any Indemnitee to indemnification under the
provisions hereof with respect to any action, suit, proceeding or investigation
arising out of or relating to any
-19-
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.
Section 9. Other Rights. The indemnification and advancement of expenses
provided by this ARTICLE TWELFTH shall not be deemed exclusive of any other
rights to which an Indemnitee seeking indemnification or advancement of expenses
may be entitled under any law (common or statutory), agreement or vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in any other capacity while holding office
for the Corporation, and shall continue as to an Indemnitee who has ceased to be
a director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
ARTICLE TWELFTH shall be deemed to prohibit, and the Corporation is specifically
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
ARTICLE TWELFTH. In addition, the Corporation may, to the extent authorized from
time to time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving the Corporation
and such rights may be equivalent to, or greater or less than, those set forth
in this ARTICLE TWELFTH.
Section 10. Partial Indemnification. If an Indemnitee is entitled under
any provision of this ARTICLE TWELFTH to indemnification by the Corporation for
some or a portion of the expenses (including attorneys' fees), judgments, fines
or amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with any action, suit, proceeding or investigation and any
appeal therefrom but not, however, for the total amount thereof, the Corporation
shall nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
Section 11. Insurance. The Corporation may purchase and maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise (including any employee benefit plan) against any
expense, liability or loss incurred by him in any such capacity, or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
Section 12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this ARTICLE TWELFTH with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the date of such merger or
consolidation.
-20-
Section 13. Savings Clause. If this ARTICLE TWELFTH or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
ARTICLE TWELFTH that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 14. Definitions. Terms used herein and defined in Section 145(h)
and Section 145(i) of the General Corporation Law of the State of Delaware shall
have the respective meanings assigned to such terms in such Section 145(h) and
Section 145(i).
Section 15. Subsequent Legislation. If the General Corporation Law of the
State of Delaware is amended after adoption of this ARTICLE TWELFTH to expand
further the indemnification permitted to Indemnitees, then the Corporation shall
indemnify such persons to the fullest extent permitted by the General
Corporation Law of State of Delaware, as so amended.
In accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Restated Certificate of Incorporation was
duly proposed and declared advisable by the Board of Directors of the
Corporation and duly adopted pursuant to a written consent of the stockholders
of the Corporation, given in accordance with Section 228 of the General
Corporation Law of the State of Delaware, and that in accordance with such
Section 228, written notice has been given to those stockholders who have not
consented in writing.
IN WITNESS WHEREOF, SCRIPTECH PHARMACEUTICALS, INC. has caused this
Restated Certificate of Incorporation to be signed by its President and attested
by its Secretary this 16th day of September, 1993.
By: /s/
---------------------------------
President
Attest: /s/
--------------------------------
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:30 PM 01/14/1994
734014017 - 2309821
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTECH PHARMACEUTICALS, INC.
SCRIPTECH PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That, pursuant to the provisions of Section 141, 151 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated December 28, 1993, adopted a resolution
increasing the authorized capital stock of the Corporation, which resolution is
as follows:
VOTED: That it is hereby proposed and declared advisable to amend the
Restated Certificate of Incorporation of the Corporation by
changing ARTICLE FOURTH thereof so that, as amended, it shall
read:
ARTICLE FOURTH: Capital Stock.
The total number of shares which the Corporation shall have
authority to issue is (i) Fifteen Million (15,000,000) shares
of Common Stock, with a par value of one cent ($.01) per share
(the "Common Stock"), and (ii) Six Million Four Hundred
Thousand (6,400,000) shares of Series A Preferred Stock, with
a par value of one cent ($.01) per share (the "Preferred
Stock").
SECOND: That the stockholders of the Corporation, in accordance with
Sections 228 and 242 of the General Corporation Law of the State of Delaware, by
written consent dated as of December 28, 1993, approved the amendment of the
Corporation's Restated Certificate of Incorporation set forth above.
TN WITNESS WHEREOF, SCRIPTECH PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to the Restated Certificate of Incorporation to be
signed by its President and attested by its Secretary this 14 day of January,
1994.
By: /s/ [ILLEGIBLE]
--------------------------
President
Attest: /s/ Karen A. Hamlin
-----------------------------
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 03:15 PM 05/10/1994
944082840 - 2309821
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTECH PHARMACEUTICALS, INC.
SCRIPTECH PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That, pursuant to the provisions of Sections 141 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated February 28, 1994, adopted the following
resolution:
VOTED: That it is hereby proposed and declared advisable to amend the
Restated Certificate of Incorporation of the Corporation by
changing ARTICLE FOURTH thereof so that, as amended, it shall read:
ARTICLE FOURTH: Capital Stock
The total number of shares which the Corporation shall have
authority to issue is (i) Fifteen Million (15,000,000) shares of
Common Stock, with a par value of one cent ($.01) per share (the
"Common Stock"), and (ii) Six Million Seven Hundred Thousand
(6,700,000) shares of Series A Preferred Stock, with a par value of
one cent ($.01) per share (the "Preferred Stock").
SECOND: That, pursuant to the provisions of Sections 141 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated April 14, 1994, adopted the following
resolution:
VOTED: That it is hereby proposed and declared advisable to amend the
Restated Certificate of Incorporation, as amended, of the
Corporation, by deleting the number "3,200,000" appearing in
subsection (c)(vii) of Section 5 of Section (b) of ARTICLE FOURTH
and inserting in its place the number "4,850,000,"
and, pursuant to such resolution, subsection (c)(vii) of Section 5 of Section
(b) of Article FOURTH of the Corporation's Restated Certificate of
Incorporation shall read as follows:
(vii) As used in this paragraph (c), "Excluded Stock" shall mean (x) up to
4,850,000 shares (such amount to be appropriately adjusted in the
event of any stock dividend, stock split or combination, or similar
recapitalization affecting the Common Stock) of Common Stock or
options for the purchase thereof issued, sold or granted, in the
past or future, by the Corporation to its employees, directors or
consultants pursuant to bona fide employee stock purchase, option or
similar benefit plans or other incentive programs or compensation
arrangements approved by the Board of Directors of the Corporation,
as more fully detailed in Section 7.14 of the Stock Purchase
Agreement.
THIRD: That the stockholders of the Corporation, in accordance with
Sections 228 and 242 of the General Corporation Law of the State of Delaware, by
written consents dated as of March 1, 1994 and April 21, 1994, respectively,
approved the amendments of the Corporation's Restated Certificate of
Incorporation set forth above.
IN WITNESS WHEREOF, SCRIPTECH PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to the Restated Certificate of Incorporation to be
signed by its President and attested by its Secretary this 10 day of May,
1994.
By: /s/ Thomas A. Bologna
---------------------
President
Attest: /s/ Karen A. Hamlin
-----------------------
Secretary
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:00 PM 11/29/1994
94229622 - 2309821
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTECH PHARMACEUTICALS, INC.
SCRIPTECH PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That, pursuant to the provisions of Sections 141 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated November 15, 1994, adopted the following
resolution:
VOTED: That it is hereby proposed and declared advisable to amend the
Restated Certificate of Incorporation of the Corporation by
changing ARTICLE FIRST thereof so that, as amended, it shall read:
ARTICLE FIRST: The name of the corporation is SCRIPTGEN
Pharmaceuticals, Inc. (the "Corporation").
SECOND: That the shareholders of the Corporation, in accordance with
Sections 228 and 242 of the General Corporation Law of the State of Delaware, by
written consents dated as of November 15, 1994, approved the amendments of the
Corporation's Restated Certificate of Incorporation set forth above.
IN WITNESS WHEREOF, SCRIPTECH PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to the Restated Certificate of Incorporation to be
signed by its President and attested by its Secretary this 18th day of November,
1994.
By: /s/ Thomas A. Bologna
------------------------
Thomas A. Bologna, President
Attest: /s/ Karen A. Hamlin
--------------------------
Karen A. Hamlin, Secretary
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTGEN PHARMACEUTICALS, INC.
SCRIPTGEN PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That, pursuant to the provisions of Sections 141 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated April 12, 1995, adopted the following
resolution:
VOTED: That it is hereby proposed and declared advisable to amend the
Restated Certificate of Incorporation of the Corporation, as
amended, to read substantially in the form attached hereto as
Exhibit A.
SECOND: That the shareholders of the Corporation, in accordance with
Sections 228 and 242 of the General Corporation Law of the State of Delaware,
by written consents dated as of April 12, 1995, approved the amendments of
the Corporation's Restated Certificate of Incorporation, as amended, as set
forth above.
IN WITNESS WHEREOF, SCRIPTECH PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to the Restated Certificate of Incorporation to be
signed by its President and attested by its Secretary this 19th day of
April, 1995.
By: /s/ Thomas A. Bologna
-------------------------------
Thomas A. Bologna, President
Attest: /s/ Karen A. Hamlin
-----------------------------
Karen A. Hamlin, Secretary
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
0F
SCRIPTGEN PHARMACEUTICALS, INC.
SCRIPTCEN PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is SCRIPTGEN Pharmaceuticals, 1nc. The
corporation was originally incorporated under the name, ScripTech and the
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on September 17, 1992.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of the Corporation as heretofore supplemented or amended.
3 The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
ARTICLE FIRST: The name of the corporation is SCRIPTGEN Pharmaceuticals,
Inc. (the "Corporation").
ARTICLE SECOND: The address of the registered office of the Corporation in
the State of Delaware shall be 1209 Orange Street, Wilmington, County of New
Castle, Delaware 19801 and the name of its registered agent at such address
shall be The Corporation Trust Company.
ARTICLE 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.
ARTICLE FOURTH: The total number of shares which the Corporation shall
have authority to issue is (i) Twenty Million (20,000,000) shares of Common
Stock, with a par value of one cent ($.01) per share (the "Common Stock"), and
(ii) Sixteen Million Four Hundred Thousand (16,400,000) shares of Preferred
Stock, with a par value of one cent ($.01) per share (the "Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. All shares of any one series of Preferred Stock shall be identical in
all respects. Originally, Nine Million Seven Hundred Thousand (9,700,000) shares
of Preferred Stock shall be designated as Series B Preferred Stock (the "Series
B Preferred Stock") and Six Million Seven Hundred Thousand (6,700,000) shares of
Preferred Stock shall be designated as Series A Preferred Stock (the "Series A
Preferred Stock"). The rights, preferences, privileges and restrictions granted
to and imposed upon the Series B Preferred Stock, the Series A Preferred Stock
and the Common Stock are set forth below in this ARTICLE FOURTH.
1. Dividends.
1.1 Dividends on the Series B Preferred Stock. The holders of the Series B
Preferred Stock shall be entitled to receive dividends when, as and if declared
by the Board of Directors of the Corporation (the "Board of Directors") Out of
funds legally available therefor.
1.2. Dividends on Series A Preferred Stock. The holders of the Series A
Preferred Stock shall be entitled to receive dividends when, as and if declared
by the Board of Directors out of funds legally available therefor; provided,
however, that no dividend shall be declared or paid on the Series A Preferred
Stock unless the Corporation shall simultaneously declare and pay an equal
dividend on each outstanding share of Series B Preferred Stock (as calculated by
assuming the conversion of all shares of Series B Preferred Stock and Series A
Preferred Stock into shares of Common Stock pursuant to the provisions of
Section 4 of this ARTICLE FOURTH immediately prior to the payment of such
dividend).
1.3. Dividends on Common Stock. The holders of the Common Stock shall be
entitled to receive dividends when, as and if declared by the Board of Directors
out of funds legally available therefor; provided, however, that no dividend
shall be declared or paid on the Common Stock unless the Corporation shall
simultaneously declare and pay an equal dividend on each outstanding share of
Series B Preferred Stock and each outstanding share of Series A Preferred Stock
(as calculated by assuming the conversion of all shares of Series B Preferred
Stock and Series A Preferred Stock into shares of Common Stock pursuant to the
provisions of Section 4 of this ARTICLE FOURTH immediately prior to the payment
of such dividend).
2. Liquidation, Dissolution or Winding Up.
2.1. Liquidation Preference. In the event of any liquidation, dissolution
or winding up of the Corporation, either voluntary or involuntary, distributions
to the stockholders of the Corporation shall be made in the following manner:
(a) The holders of the Series B Preferred Stock shall receive, prior
and in preference to any distribution of any of the assets of the
Corporation to the holders of any other series of Preferred Stock or the
Common Stock, an amount equal to $1.00 per share of Series B Preferred
Stock (which amounts shall be subject to equitable adjustment as determined
in good faith by the Board of Directors whenever there shall occur a stock
-2-
split, combination, reclassification or other similar event involving the
Series B Preferred Stock) held by each of them, plus an amount equal to
all declared but unpaid dividends on such share of Series B Preferred
Stock, if any, to and including the date full payment of such preferential
amount shall be tendered with respect to such share of Series B Preferred
Stock to the holder of such share of Series B Preferred Stock, in
connection with such liquidation, dissolution or winding up. If the assets
of the Corporation legally available for distribution shall be
insufficient to permit the payment in full to all such holders of the
Series B Preferred Stock of the full aforesaid preferential amounts, then
the entire assets of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series B Preferred
Stock in accordance with the aggregate liquidation preference of the
shares of Series B Preferred Stock held by each of them.
(b) The holders of the Series A Preferred Stock shall receive, prior
and in preference to any distribution of any of the assets of the
Corporation to the holders of any other series of Preferred Stock (other
than the Series B Preferred Stock) or the Common Stock, an amount equal to
$1.00 per share of Series A Preferred Stock (which amounts shall be
subject to equitable adjustment as determined in good faith by the Board
of Directors whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Series A Preferred
Sock) held by each of them, plus an amount equal to all declared but
unpaid dividends on such share of Series A Preferred Stock, if any, to and
including the date full payment of such preferential amount shall be
tendered with respect to such share of Series A Preferred Stock to the
holder of such share of Series A Preferred Stock, in connection with such
liquidation, dissolution or winding up. If the assets of the Corporation
legally available for distribution to the holders of the Series A
Preferred Stock shall be insufficient to permit the payment in full to all
such holders of the Series A Preferred Stock of the full aforesaid
preferential amounts, then the entire assets of the Corporation legally
available for such distribution shall be distributed ratably among the
holders of the Series A Preferred Stock in accordance with the aggregate
liquidation preference of the shares of Series A Preferred Stock held by
each of them.
(c) If payment has been made to the holders of the Series B
Preferred Stock and the holders of the Series A Preferred Stock of the
full amount to which they shall be entitled pursuant to Sections 2.1(a)
and (b) of this ARTICLE FOURTH, the holders of the Series A and B
Preferred Stock (each share of which shall be treated for purposes of this
Section 2.1(c) as the number of shares of Common Stock into which such
share could then be converted pursuant to Section 4 of this ARTICLE
FOURTH) and the holders of the Common Stock shall then be entitled to
share ratably in the Corporation's remaining assets, based on the number
of shares of Common Stock held (or deemed to be held) by each of them.
-3-
2.2. Reorganization.
(a) In the event of a Reorganization (as defined below), each holder
of Preferred Stock shall have the option to either (i) convert his or its shares
of Preferred Stock into Common Stock in accordance with the terms and provisions
of Section 4 of this ARTICLE FOURTH, or (ii) have the Corporation redeem his or
its shares of Preferred Stock in exchange for the Preferred Stock Liquidation
Preference, as hereinafter provided in sub-section(c) below. For purposes of
this Section 2.2, "Reorganization" shall mean any merger or consolidation of the
Corporation into or with any other corporation or entity, or a sale, conveyance,
mortgage, transfer, license, pledge, lease or other disposition of all or
substantially all of the assets of the Corporation, unless the stockholders of
the Corporation immediately prior thereto shall, immediately thereafter, hold as
a group the right to cast not less than 51% of the votes of all holders of
voting securities of the resulting or surviving corporation or entity on any
matter on which any such holders of voting securities shall be entitled to vote,
in which case, such event shall not be deemed to be a Reorganization for the
purposes of this Section 2.2.
(b) All holders of record of shares of Preferred Stock will be given
at least 20 but not more than 60 days' prior written notice of the
Reorganization and the date fixed (the "Option Date") and the place designated
for conversion or redemption pursuant to this Section 2.2. Such notice will be
sent by registered mail, return receipt requested, to each record holder of
Preferred Stock at such holder's address last shown on the records of the
transfer agent for the Preferred Stock (or the records of the Corporation if it
serves as its own transfer agent). Each holder of Preferred Stock shall give
written notice to the Corporation of his or its election (i) to convert his or
its shares of Preferred Stock into Common Stock or (ii) to receive the Preferred
Stock Liquidation Preference, at least 3 days prior to the Option Date. If the
Corporation has not received notice of such election prior to such three-day
period, such holder shall be deemed to have elected to convert his or its shares
of Preferred Stock into Common Stock in accordance with the terms and provisions
of Section 4 of this ARTICLE FOURTH.
(c) If an election to receive the Preferred Stock Liquidation
Preference is made, on or before the Option Date, each holder of shares of
Preferred Stock making such election shall surrender his or its certificate or
certificates for all such shares to the Corporation at the place designated in
such notice. If required by the Corporation, certificates surrendered for
redemption shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or his or its attorney duly authorized in writing. On
the Option Date and upon the surrender of the certificate or certificates
representing shares of Preferred Stock, the Corporation shall pay in full to
such holder the Preferred Stock Liquidation Preference with respect to such
shares of Preferred Stock. On and after the Option Date, all rights with respect
to such holders of Preferred Stock who elected to receive the Preferred Stock
Liquidation Preference, including the rights, if any, to receive notices and
vote, will terminate, except only the rights of holders thereof, upon surrender
of their certificate or certificates
-4-
therefor, to receive payment of the Preferred Stock Liquidation Preference as
aforesaid.
(d) All certificates evidencing shares of Preferred Stock which are
required to be surrendered in accordance with this Section 2.2 shall, from and
after the Option Date, be deemed to have been retired and canceled and the
shares of Preferred Stock represented thereby for all purposes shall also be
deemed retired and canceled, and shall not be reissued, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. The Corporation may thereafter take such appropriate action
as may be necessary to reduce accordingly the authorized number of shares of
Preferred Stock.
(e) Notwithstanding anything to the contrary contained in this
Section 2.2, unless the holders of Preferred Stock shall otherwise notify the
Corporation, no such holder shall be deemed to have elected to convert his or
its shares of Preferred Stock into Common Stock or redeemed his or its shares of
Preferred Stock, as the case may be, as a result of a Reorganization, and no
such conversion or redemption shall be effective, unless and until the
Reorganization referred to in the notice given to holders of record of Preferred
Stock pursuant to Section 2.2(b) hereof shall have been consummated.
2.3. Distribution Other Than Cash. Whenever the distribution provided for
in this Section 2 shall be payable in property other than cash, the value of
such distribution shall be the fair market value of such property as determined
in good faith by the Board of Directors, provided, however, that if the holders
of 25% of the then outstanding shares of Series B Preferred Stock voting as a
single class (the "Contesting Holders"), notify the Board of Directors within
five business days after receiving written notification of such determination of
fair market value that they disagree with such determination, then the Board of
Directors and the Contesting Holders shall have 30 days to agree upon a fair
market value of the relevant property. If, by the end of such 30-day period they
are unable to agree on a fair market value, the fair market value shall be
determined by an appraisal to be paid for by the Corporation. All appraisals
shall be undertaken by two appraisers, one selected by the Corporation and one
selected by the Contesting Holders, which selections must be made within 10 days
after the expiration of the 30-day period described above. If one selecting
party fails to timely select its appraiser, the other selecting party shall
select both appraisers. The fair market value shall be the fair market value
arrived at by those appraisers within 60 days following the appointment of the
last appraiser to be appointed. In the event that the two appraisers cannot
agree on such fair market value within such a period of time, (i) if the
appraisers' valuations are within 10% of each other the fair market value shall
be the average of the two valuations and (ii) if the differences in the
valuations are greater, the appraisers shall elect a third appraiser who will
calculate fair market value independently, and, except as provided in the next
sentence, the fair market value of the property shall in each case be the
average of the two fair market values arrived at by the appraisers who are
closest in amount. If one appraiser's valuation is the average of the other two
valuations, the average valuation shall be the fair market value. In the event
that the two original appraisers cannot agree upon a third appraiser within 30
days following the end of the 60-day period referred to above, then the third
appraiser shall be appointed by the American Arbitration Association.
-5-
3. Voting.
3.1. General. Except as otherwise expressly provided in Section 3.2 of
this ARTICLIE FOURTH, or as required by law, (a) each holder of Common Stock
shall be entitled to vote on all matters and shall be entitled to one vote for
each share of Common Stock standing in such holder's name on the books of the
Corporation, (b) each holder of Series B Preferred Stock and each bolder of
Series A Preferred Stock shall be entitled to vote on all matters and shall be
entitled to that number of votes equal to the number of whole shares of Common
Stock into which such holder's shares of Preferred Stock could then be converted
as of the record date for the determination of stockholders entitled to vote on
such matters (or, if no record date is established, at the date such vote is
taken or written consent solicited) and pursuant to Section 4 of this ARTICLE
FOURTH. Except as otherwise expressly provided herein, or as required by law,
the holders of shares of Common Stock, Series A Preferred Stock, and Series B
Preferred shall vote together as a single class on all matters.
3.2. Certain Transactions. The Corporation shall not, without the written
consent or affirmative vote of the holders of greater than 75% of the then
outstanding shares of Series B Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class:
(i) merge with or into or consolidate with any other
corporation, or sell, lease, license or otherwise dispose of all or
substantially all of its properties or assets;
(ii) amend, alter or repeal the preferences, special rights or
other powers of the Series A Preferred Stock or the Series B Preferred Stock, or
otherwise amend, alter or repeal any provision of this Amended and Restated
Certificate of Incorporation, in either such case, so as to affect adversely the
Series A Preferred Stock or the Series B Preferred Stock;
(iii) directly or indirectly redeem, purchase or otherwise
acquire any of the Corporation's equity securities, other than pursuant to
Section 6 of this ARTICLE FOURTH, or pursuant to any stock option or agreement
entered into by the Corporation and approved by the Corporation's directors
designated by the holders of Preferred Stock;
(iv) directly or indirectly declare or pay any dividends or
make any distributions upon any of its equity securities, other than the
Preferred Stock;
(v) authorize, reclassify, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any securities having
equity features and which rank on a parity with or senior to either the Series A
Preferred Stock or the Series B Preferred Stock with respect to the payment of
dividends or upon liquidation or other distribution of assets, or with a
conversion price lower than that of the Series A Preferred Stock or Series B
Preferred Stock, or having other terms more favorable than those of the Series A
Preferred Stock or Series B Preferred Stock;
-6-
(vi) make any amendment to the Corporation's By-Laws, or file
any resolution of the Board of Directors with the Secretary of State of the
State of Delaware containing any provisions, which would adversely affect or
otherwise impair the rights of the holders of the Series A Preferred Stock or
Series B Preferred Stock or the Common Stock issued or issuable upon conversion
of such Preferred Stock; or
(vii) other than the issuance of the Series A Preferred Stock
issued in accordance with the Stock Purchase Agreement, dated September 16,
1993, between the Corporation and the Purchasers named therein (the "Series A
Stock Purchase Agreement"), and the issuance of the Series B Preferred Stock
issued in accordance with the Series B Stock Purchase Agreement dated on or
about April __, 1995 between the Corporation and the Purchasers named therein,
enter into any transaction the effect of which shall (x) cause the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended) of 20% or more of the combined voting power of
the then outstanding voting securities of the Corporation entitled to vote
generally in the election of directors to be held by any individual, entity or
two or more individuals or entities who agree to act in concert or (y) cause the
Corporation's Board of Directors to be elected other than as set forth in the
Stockholders' Agreement, or (z) otherwise result in a change in control of the
Corporation;
(viii) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(ix) incur, create, assume, become or be liable in any manner
with respect to, or permit to exist, any indebtedness for borrowed money, or any
other indebtedness evidenced by, or liability evidenced by notes, bonds,
debentures or similar obligations or either directly or indirectly guarantee,
endorse or become surety for, or otherwise in any manner become responsible for
the obligations of any other person, other than indebtedness with respect to
trade and operating obligations and other normal accruals in the ordinary course
of business (which will be paid in accordance with customary trade practice) or
with respect to which it is contesting in good faith the amount or validity
thereof by appropriate proceedings, and then only to the extent it has set aside
on its books adequate reserves therefor; and
(x) incur capital expenditures or make commitments for capital
expenditures, services or product development in excess of the greater of
$100,000 or 110% of the amount budgeted in the yearly budget and operating plan
of the Corporation for any such expenditure or commitment.
4. Conversion.
4.1. Optional Conversion The holders of Preferred Stock shall have
conversion rights as follows:
(a) Right to Convert.
-7-
(i) Each share of Preferred Stock shall be convertible, at the
option of the holder thereof, at any time and from time to time into the number
of fully paid and nonassessable shares of Common Stock of the Corporation as is
determined by dividing $1.00 by the Current Conversion Price (as defined in
paragraph (c) below) in effect at the time of conversion. The conversion price
at which shares of Common Stock shall be deliverable upon conversion of
Preferred Stock without the payment of additional consideration by the holder
thereof shall initially be $1.00, subject to adjustment as provided in paragraph
(c) below.
(ii) No fractional shares of Common Stock shall be issued upon
conversion of shares of Preferred Stock. In lieu of any fractional share to
which the holder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being converted, the Corporation shall pay cash equal to
such fraction multiplied by the then Current Conversion Price.
(b) Mechanics of Conversion
(i) In order for a holder of Preferred Stock to convert shares
of Preferred Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Preferred Stock, at the office of
the transfer agent for the Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent), together with
written notice that such holder elects to convert all or any number of the
shares of Preferred Stock represented by such certificate or certificates. Such
notice shall state such holder's name or the names of the nominees in which such
holder wishes the certificate or certificates for Shares of Common Stock to be
issued. If required by the Corporation, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or his or its attorney duly authorized in writing. The date of
receipt of such certificates and notice by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) shall be the
conversion date (the "Conversion Date"). The Corporation shall, as soon as
practicable after the Conversion Date, issue and deliver at such office to such
holder of Preferred Stock, or to his or its nominees, a certificate or
certificates for the number of whole shares of Common Stock (and any shares of
Preferred Stock represented by the certificate or certificates delivered to the
Corporation by the holder thereof which are not converted into Common Stock)
issuable upon such conversion in accordance with the provisions hereof, together
with cash in lieu of fractional shares calculated in accordance with
subparagraph (ii) of paragraph (a) above. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of certificates of Preferred Stock to be converted, and the person or
persons entitled to receive shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on that date.
(ii) The Corporation shall at all times when the Preferred
Stock shall be outstanding, reserve and keep available out of its authorized but
unissued stock, for the purpose of effecting the conversion of the Preferred
Stock, such number of its duly authorized shares of
-8-
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Preferred Stock. Before taking any action which
would cause Common Stock, upon the conversion of Preferred Stock, to be issued
below the then par value of the shares of Common Stock, the Corporation will
take any corporate action which may, in the opinion of its counsel be, necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of Common Stock to the holders of Preferred Stock. The
Corporation will not close its books against the transfer of the Preferred Stock
or of Common Stock issued or issuable upon conversion of the Preferred Stock in
any manner which interferes with the timely conversion of the Preferred Stock.
(iii) All shares of Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor and payment of any declared and
unpaid dividends thereon. On and as of the Conversion Date, the shares of Common
Stock issuable upon such conversion shall be deemed to be outstanding, and the
holder thereof shall be entitled to exercise and enjoy all rights with respect
to such shares of Common Stock, including the rights, if any, to receive notices
and to vote. All certificates representing shares of Preferred Stock, from and
after the Conversion Date, shall be deemed to have been retired and canceled and
shall not be reissued, and the Corporation may thereafter take such appropriate
action as may be necessary to reduce accordingly the authorized number of shares
of Preferred Stock.
(c) Adjustments to Conversion Price. The initial conversion price as
stated in subparagraph (i) of paragraph (a) above shall be subject to adjustment
from time to time and such conversion price as adjusted shall likewise be
subject to further adjustment, all as hereinafter set forth. The tern "Current
Conversion Price" shall mean, as of any time, the conversion price of the
Preferred Stock at that time, as specified in paragraph (a) above in case no
adjustment shall have been required, or such conversion price as adjusted
pursuant to this paragraph (c), as the case may be.
(i) If at any time after the date of issuance of the Preferred
Stock the Corporation shall issue (x) any shares of Common Stock other than (A)
Excluded Stock (as defined in subparagraph (vii) below), (B) Common Stock issued
or issuable upon conversion of the Preferred Stock or (C) by way of dividend or
other distribution on shares of Common Stock referred to in the foregoing
clauses (A) and (B), or (y) any shares of a class or series convertible into
Common Stock. other than the Preferred Stock (collectively, with the Common
Stock, such "Securities"), for a consideration per share (the consideration in
each case to be determined in the manner provided in (E) and (F) of subparagraph
(ii) below) less than the Current Conversion Price in effect immediately prior
to the issuance of such Securities, the Current Conversion Price in effect
immediately prior to each such issuance shall forthwith (except as provided in
subparagraph (ii) below) be adjusted to a Current Conversion Price obtained by
dividing an amount equal to the sum of
(x) the total number of shares of Common Stock outstanding
(including the
-9-
number of shares of Common Stock into which the outstanding
shares of Preferred Stock and other securities convertible
into Preferred Stock are then directly or indirectly
convertible) immediately prior to such issuance multiplied by
the Current Conversion Price in effect immediately prior to
such issuance, plus
(y) the consideration received by the Corporation upon such
issuance, by
(z) the total number of shares of Common Stock outstanding
(including the number of shares of Common Stock into which the
outstanding shares of Preferred Stock or other securities
convertible into Preferred Stock are then directly or
indirectly convertible) immediately after such issuance
(including the number of shares of Common Stock into which
such newly issued Securities are then convertible).
(ii)For the purpose of any adjustment of the Conversion Price
pursuant to subparagraph (c)(i) above, the following provisions shall be
applicable:
(A) In the case of the issuance of options or warrants to purchase or
rights to subscribe for Common Stock other than Excluded Stock
(collectively, "Rights"), the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such Rights shall be
deemed to have been issued at the time such Rights were issued, for
a consideration equal to the consideration (determined in the manner
provided in (E) and (F) below), if any, received by the Corporation
on the issuance of such Rights, plus the minimum purchase price
provided in such Rights for the Common Stock covered thereby;
provided that such shares of Common Stock deliverable upon the
exercise of such Rights shall not be deemed to have been issued
unless such consideration per share would be less than the Current
Conversion Price in effect on the date of and immediately prior to
such issue. No further adjustment of the Current Conversion Price
adjusted upon the issuance of such Rights shall be made as a result
of the actual issuance of shares of Common Stock deliverable upon
exercise of such Rights.
(B) In the case of the issuance of securities by their terms convertible
into or exchangeable for Common Stock other than Excluded Stock
(collectively, "Convertible Securities"), or options or warrants to
purchase or rights to subscribe for securities by their terms
convertible or exchangeable for Common Stock other than Excluded
Stock (collectively, "Related Rights"), the aggregate maximum number
of shares of Common Stock deliverable upon conversion, exchange or
exercise of any such Convertible Securities or such Related Rights
shall be deemed to have been issued at the time such Convertible
Securities or such Related Rights
-10-
were issued and for a consideration equal to the consideration
received by the Corporation upon issuance of such Convertible
Securities or such Related Rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the Corporation
upon the conversion, exchange or exercise of such Convertible
Securities or Related Rights (the consideration in each ease to be
determined in the manner provided in (E) and (F) below); provided
that such shares of Common Stock deliverable upon such conversion,
exchange or exercise of such Convertible Securities or Related
Rights shall not be deemed to have been issued unless such
consideration per share would be less than the Current Conversion
Price in effect on the date of and immediately prior to such issue.
No further adjustment of the Current Conversion Price adjusted upon
the issuance of such Related Rights shall be made as a result of the
actual issuance of such Convertible Securities deliverable upon
exercise of such Related Rights.
(C) On any change in the number of shares of Common Stock deliverable
upon the exercise of such Rights or Related Rights or upon the
conversion, exchange or exercise of such Convertible Securities or
on any change in the minimum purchase price of such Rights, Related
Rights or Convertible Securities other than a change resulting from
the anti-dilution provisions of such Rights, Related Rights or
Convertible Securities, the Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have been
obtained had the adjustment made upon the issuance of such Rights,
Related Rights or Convertible Securities not converted, exchanged or
exercised prior to such change, been made upon the basis of such
change.
(D) On the expiration of any such Rights, Related Rights or Convertible
Securities, the Current Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have obtained
had the adjustment made upon the issuance of such Rights or Related
Rights or the conversion, exchange or exercise of any such
Convertible Securities been made upon the basis of the issuance of
only the number of shares of Common Stock actually issued upon the
exercise of such Rights or Related Rights or the conversion,
exchange or exercise of any such Convertible Securities.
(E) In the case of the issuance of such Securities for cash, the
consideration shall be deemed to be the amount of cash paid therefor
(excluding amounts paid for accrued interest or accrued dividends).
(F) In the case of the issuance of such securities for a consideration
in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in
good faith by the Board of Directors of the Corporation.
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(iii) If the Corporation declares a dividend or other
distribution payable in such Securities or subdivides its outstanding shares of
Common Stock into a larger number or combines its outstanding shares of Common
Stock into a smaller number, then the Current Conversion price in effect
immediately prior to such dividend, other distribution, subdivision or
combination, as the case may be, shall forthwith be adjusted to that price
determined by multiplying the Current Conversion Price by a fraction (x) the
numerator of which shall be the total number of outstanding shares of such
Securities immediately prior to such dividend, other distribution, subdivision
or combination and (y) the denominator of which shall he the total number of
outstanding shares of such Securities immediately after such dividend, other
distribution, subdivision or combination.
(iv) In case the Corporation shall declare a dividend or
otherwise distribute to the holders of its Common Stock shares of its capital
stock (other than such Securities), stock or other securities of other persons,
evidences of indebtedness issued by the Corporation or other persons, assets
(excluding cash dividends) or options, warrants or rights (excluding such Rights
or Related Rights), then, in each such case, immediately following the record
date fixed for the determination of the holders of Common Stock entitled to
receive such dividend or distribution, the Current Conversion Price in effect
thereafter shall be determined by multiplying the Current Conversion Puce in
effect immediately prior to such record date by a fraction (A) the numerator of
which shall be an amount equal to the remainder of (x) the Current Market Price
(as defined in subparagraph (viii) below) determined immediately prior to such
distribution of one share of Common Stock less (y) the fair value (as determined
in good faith by the Corporation's Board of Directors) of the stock, securities,
evidences of indebtedness, assets, options, warrants or rights so dividended or
distributed in respect of one share of Common Stock, as the case may be, and (B)
the denominator of which shall be the Current Market Price of one share of
Common Stock determined immediately prior to such dividend or distribution. Such
adjustment shall be made on the date such dividend or distribution is made, and
shall become effective at the opening of business on the business day following
the record date for the determination of stockholders entitled to such dividend
or distribution.
(v) In the event the Corporation is in arrears with respect to
the payment of any dividend or portion thereof declared but unpaid on shares of
Preferred Stock, at the time a holder elects to convert such shares of Preferred
Stock, the Current Conversion Price in effect immediately prior to such
conversion shall forthwith be reduced (but only with respect to the shares of
Preferred Stock being so converted) by an amount equal to the quotient of(x) the
aggregate arrearage per share of Preferred Stock being converted, divided by (y)
the number of shares of Common Stock into which such share of Preferred Stock
being converted is then convertible; provided, however, that the application of
the foregoing shall not reduce the Current Conversion Price below $.01.
(vi) Whenever the Current Conversion Price shall be adjusted
as provided in this Section 5, the Corporation shall forthwith file, at the
office of the transfer agent for the Preferred Stock, at the principal office of
the Corporation or at such other place as may be designated by the Corporation,
a statement, certified by the chief financial officer of the Corporation,
showing in detail
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the facts requiring such adjustment and the Current Conversion Price that shall
be in effect after such adjustment. The Corporation shall also cause a copy of
such statement to be sent by first class mail, postage prepaid, to each bolder
of record of Preferred Stock at such holder's address as shown in the records of
the Corporation.
(vii) As used in this paragraph (c), "Excluded Stock" shall
mean (x) up to 4,850,000 shares (such amount to be appropriately adjusted in the
event of any stock dividend, stock split or combination, or similar
recapitalization affecting the Common Stock) of Common Stock or options for the
purchase thereof issued, sold or granted, in the past or future, by the
Corporation to its employees, directors or consultants pursuant to bona fide
employee stock purchase, option or similar benefit plans or other incentive
programs or compensation arrangements approved by the Board of Directors of the
Corporation, as more fully detailed in Section 7.14 of the Stock Purchase
Agreement, dated as of September 16,1993 and as amended among the Company and
the purchasers named therein.
(viii) For the purpose of any computation pursuant to,
subparagraph (iv) above, the "Current Market Price" at any date of one share of
Common Stock shall be deemed to be the average of the daily closing prices for
the 30 consecutive business days ending 15 business days before the data in
question (as adjusted for any stock splits, stock dividends, combinations or
recapitalizaton that took effect during such 30 business-day period). The
closing price for each day shall be the last reported sales price on such day on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading, or if not listed or admitted to trading national
securities exchange, the average of the last reported bid and asked prices as
reported by the National Association of Securities Dealers Automated Quotation
System, Inc., all as adjusted for stuck splits, stock dividends, combinations or
similar recapitalization that took effect during such 30 business-day period;
provided, however, that if the Common Stock is not traded in such a manner that
the quotations referred to in this subparagraph (viii) are available for the
period required hereunder, the Current Market Price shall be deemed to be the
fair value of such Common Stock as determined in good faith by the Board of
Directors of the Corporation.
(ix) If any event occurs of the type contemplated by the
provisions of this Section 5 but not expressly provided for by such provisions,
then the Directors will make an appropriate adjustment in the Current Conversion
Price as to protect the rights of the holders of the Preferred Stock; provided
that no such adjustment will increase the Current Conversion Price except as
otherwise permitted pursuant to subparagraph (iii) above or subparagraph
(c)(ii)(D) of this Section 5 or decrease the number of shares of Common Stock
issuable upon conversion.
4.2. Mandatory Conversion.
(a) Upon the earlier to occur of (i) the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale by the
Corporation of Common Stock to the public at a minimum price per share of $5.00
resulting in aggregate gross proceeds to the Corporation of not less than
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$10,000,000, and (ii) the written consent or affirmative vote of the holders of
not less than 85% of the then outstanding shares of Preferred Stock, given in
writing or by vote at a meeting, all shares of Preferred Stock then outstanding
shall automatically be converted into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $1.00 by the
Current Conversion Price then in effect pursuant to Section 4.1 of this ARTICLE
FOURTH, subpart (b).
(b) No fractional shares of Common Stock shall be issued upon
conversion of shares of Preferred Stock. In lieu of any fractional share to
which the bolder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being conerted, the Corporation shall pay cash equal to
such fraction multiplied by the then Current Conversion Price.
(c) All holders of record of shares of Preferred Stock will be given
at least 10 but not more than 30 days' prior written notice of the date fixed
(the "Mandatory Conversion Date") and the place designated for mandatory
conversion of all shares of Preferred Stock pursuant to this Section 4.2. Such
notice will be sent by first class or registered mail, postage prepaid, to each
record holder of Preferred Stock at such holder's address last shown on the
records of the transfer agent for the Preferred Stock (or the records the
Corporation if it serves as its own transfer agent). On or before the Mandatory
Conversion Date, each holder of shares of Preferred Stock shall surrender his or
its certificate or certificates for all such shares to the Corporation at the
place designated in such notice. If required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by a written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly executed by the registered holder or his or its attorney duly authorized in
writing. On and after the Mandatory Conversion date, all rights with respect to
the Preferred Stock, including the rights, if any, to receive notices and vote,
will terminate, except only the rights of the holders thereof, upon surrender
of their certificate or certificates thereof, to receive certificates for the
number of shares of Common Stock into which such Preferred Stock has been
converted and payment of any declared but unpaid dividends thereon. As soon as
practicable after the Mandatory Conversion Date and upon the surrender of the
certificate or certificates representing shares of Preferred Stock, the
Corporation shall issue and deliver to such holder, or on his or its written
order, a certificate or certificates for the number of whole shares of Common
Stock issuable under such conversion in accordance with the provisions hereof,
together with cash as provided in subparagraph (b) of this Section 4.2 in
respect of any fraction of a share of Common Stock otherwise issuable upon such
conversion.
(d) All certificates evidencing shares of Preferred Stock which are
required to be surrendered in accordance with this Section 4.2, from and after
the Mandatory Conversion Date, shall be deemed to have been retired and
canceled, and the shares of Preferred Stock represented thereby, converted into
Common Stock, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date, The Corporation may then
take such appropriate action as may be necessary to reduce accordingly the
authorized number of shares of Preferred Stock.
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5. Redemption. The shares of Series B Preferred Stock shall be redeemed an
follows:
5.1. Mandatory Redemption. On January 15th in each of the years 2003, and
2004 (each a "Redemption Date"), the Corporation shall redeem 50% of the then
outstanding shares of Series B Preferred Stock at a per share price of $1.00,
plus an amount equal to all declared but unpaid dividends on such shares (the
"Redemption Price") up to and including the date such shares are redeemed,
unless such redemption is waived by the holders of 75% of the then outstanding
shares of Series B Preferred Stock.
5.2. Payment of Redemption Price. On each Redemption Date, the Corporation
will pay to the holders of the Series B Preferred Stock outstanding at the time
of the redemption an amount equal to the Redemption Price with respect to each
of the shares of Series B Preferred Stock redeemed on such date. If on a
Redemption Date the funds of the Corporation legally available for redemption of
shares of Series B Preferred Stock are insufficient to redeem the number of the
outstanding shares of Series B Preferred Stock that are to be redeemed on such
date, those funds which are legally available will he used to redeem, at the
Redemption Price, the maximum possible number of shares of Series B Preferred
Stock on a pro rata basis among the ho1ders thereof. At any time thereafter when
additional funds of the Corporation become legally available for the redemption
of Series B Preferred Stock, such funds will immediately be used to redeem the
balance of the shares of Series B Preferred Stock which the Corporation has
become obligated to redeem but which it has not so redeemed. In addition, any
redemption of Series B Preferred Stock shall be made out (i)of any surplus or
any capital whether or not a reduction of capital is thereby involved, and to
the extent provided by law, the Corporation shall take all necessary action to
effect a reduction of capital if such reduction is necessary to provide funds
legally available for any required redemption of Series B Preferred Stock.
5.3. Equitable Adjustment. The Redemption Price set forth in this Section
5 shall be subject to equitable adjustment whenever there shall occur a stock
split, combination, reclassification or other similar event involving the Series
B Preferred Stock.
5.4. Surrender of Certificates. Not less than 60 days before each
Redemption Date, the Corporation shall mail written notice (the "Redemption
Notice"), postage prepaid, to each holder of record of Series B Preferred Stock
at such holder's address as shown on the records of the Corporation; provided,
however, that the Corporation's failure to give such Redemption Notice shall in
no way affect its obligation to redeem the Series B Preferred Stock as provided
in Section 5.1 of this ARTICLE FOURTH. The Redemption Notice shall contain the
following information:
(i) The number of shares of Series B Preferred Stock held by the holder
which shall be redeemed by the Corporation on such Redemption Date pursuant to
the provisions of Sections 5.1 and 5.2 of this ARTICLE FOURTH.
(ii) The Redemption Date for the shares to be redeemed.
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(iii) The address at which the holder may surrender to the Corporation its
certificate or certificates representing shares of Series B Preferred Stock to
be redeemed.
Each holder of shares of Series B Preferred Stock to be redeemed shall
surrender the certificate or certificates representing such shares to the
Corporation at the place specified in the Redemption Notice on or prior to the
Redemption Date designated in the Redemption Notice, and thereupon an amount
equal to the applicable Redemption Price shall be paid to the order of the
person whose name appears on such certificate or certificates. Each surrendered
certificate shall be cancelled and retired.
5.5. Dividends and Conversion after Redemption. From and after the date on
which the Corporation shall have paid in full the Redemption Price with respect
to any shares of Series B Preferred and Series A Preferred, such shares of
Series B Preferred and Series A Preferred thereby redeemed shall not be entitled
to any further dividends pursuant to Section 1 of this ARTICLE FOURTH or to the
conversion provisions set forth in Section 4 of this ARTICLE FOURTH.
6. Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder will be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of Common Stock or Preferred Stock, and in the
case of any such loss, theft or destruction, upon receipt of indemnity and bond
reasonably satisfactory to the Corporation (provided that if the holder is an
institutional investor its own agreement will be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation will
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
ARTICLE FIFTH: The Corporation is to have perpetual existence.
ARTICLE SIXTH: In addition to, and not by way of limitation of, the powers
granted to the Board of Directors by the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal all or any of by-laws of the Corporation.
ARTICLE SEVENTH: Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall so provide.
ARTICLE EIGHTH: Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside the State
of Delaware at such place or places as
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may be designated from time to time by the Board of Directors or in the by-laws
of the Corporation.
ARTICLE 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 this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of ss.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 ss.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
stockholder 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 said
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 the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ARTICLE TENTH: The Corporation reserves the right to amend, alter, change
or repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute and by this Amended and Restated
Certificate of Incorporation, and all rights conferred upon stockholders herein
are granted subject to this reservation.
ARTICLE ELEVENTH: To the fullest extent permitted by the General
Corporation Law of the State of Delaware as it now exists or may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation, any of its stockholders or any other person or entity for monetary
damages for breach of fiduciary duty owed to the Corporation, its stockholders
or such other person or entity owing to such director's position as a director
of the Corporation. Any repeal or modification of this ARTICLE ELEVENTH by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE TWELFTH:
1. Actions, Suits and Proceedings Other Than By or in the Right of the
Corporation. The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil criminal, administrative
or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was, or has agreed to
become. a director or officer of the
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Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including any benefit plan) (all such persons being referred to hereafter as an
"Indemnitee"), or by reason of any action alleged to have been taken or omitted
to have been taken in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding. had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendre or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. Notwithstanding
anything to the contrary in this ARTICLE TWELFTH, except as set forth in Section
6 below, the Corporation shall not indemnify an Indemnitee seeking
indemnification in connection with a proceeding (or part thereof) initiated by
the Indemnitee unless the initiation thereof was approved by the Board of
Directors of the Corporation.
2. Actions or Suits By or in the Right of the Corporation. The Corporation
shall indemnify any Indemnitee who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan), or by reason of any action alleged to
have been taken or omitted to have been taken in such capacity, against all
expenses (including attorneys' fees) and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of such liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses (including attorneys' fees)
which the Court of Chancery of Delaware or such other court shall deem proper.
3. Indemnification for Expenses by Successful Party. Notwithstanding the
other provisions of this ARTICLE TWELFTH, to the extent that an Indemnitee has
been successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this ARTICLE TWELFTH, or in
defense of any claim, issue or matter therein, or on appeal from any such
action, suit or proceeding. he shall be indemnified against all expenses
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(including attorneys' fees) actually and reasonably incurred by him or on his
behalf in connection therewith. Without limiting the foregoing, if any action,
suit or proceeding is disposed of, on the merits or otherwise (including a
disposition, without prejudice), without (i) the disposition being adverse to
the Indemnitee, (ii) an adjudication that the Indemnitee was liable to the
Corporation, (iii) a plea of guilty or nolo contendere by the Indemnitee, (iv)
an adjudication that the Indemnitee did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and (v) with respect to any criminal proceedings, an adjudication
that the Indemnitee had reasonable cause to believe his conduct was unlawful,
the Indemnitee shall be considered for the purposes hereof to have been wholly
successful with respect thereto.
4. Notification and Defense of Claim. As a condition precedent to his
right to be indemnified, the Indemnitee must notify the Corporation in writing
as soon as practicable of any action, suit, proceeding or investigation
involving him for which indemnity will or could be sought. With respect to any
action, suit, proceeding or investigation of who the Corporation is so notified,
the Corporation will be entitled to participate therein at its own expense
and/or to assume the defense thereof at its own expense, with legal counsel
reasonably acceptable to the Indemnitee. After notice from the Corporation to
the Indemnitee of its election so to assume such defense, the Corporation shall
not be liable to the indemnitee for any legal or other expenses subsequently
incurred by the Indemnitee in connection with such claim, other than as video
below in this Section 4. The Indemnitee shall have the right to employ his own
counsel in connection with such claim, but the fees and expenses of such counsel
incurred after notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the Indemnitee unless (i) the employment of
counsel by the Indemnitee has been authorized by the Corporation, (ii) counsel
to the Indemnitee, shall have reasonably concluded that there may be a conflict
of interest or position on any significant issue between the Corporation and the
Indemnitee in the conduct of the defense of an action or (iii) the Corporation
shall not in fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel for the Indemnitee shall be
at the expense of the Corporation, except as otherwise expressly provided by
this ARTICLE TWELFTH. The Corporation shall not be entitled, without the consent
of the Indemnitee, to assume the defense of any claim brought by or in the right
of the Corporation or as to which counsel for the Indemnitee shall have
reasonably made the conclusion provided for in clause (ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this ARTICLE TWELFTH of any action, suit, proceeding or investigation of
which the Corporation receives notice under this ARTICLE TWELFTH, any expenses
(including attorneys' fees) incurred by an Indemnitee in defending a civil or
criminal action, suit, proceeding or investigation or any appeal therefrom shall
be paid by the Corporation in advance of the final disposition of such matter,
provided, however, that the payment of such expenses incurred by an Indemnitee
in advance of the final disposition of such matter shall be made only upon
receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts
so advanced in the event that it shall ultimately be determined that the
Indemnitee is not entitled to be indemnified by the Corporation as authorized in
this ARTICLE
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TWELFTH. Such undertaking may be accepted without reference to the
financial ability of such person to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this ARTICLE
TWELFTH, the Indemnitee shall submit to the Corporation a written request,
including in such request such documentation and information as is
reasonably available to the Indemnitee and is reasonably necessary to
determine whether and to what extent the Indemnitee is entitled to
indemnification or advancement of expenses. Any such indemnification or
advancement of expenses shall be made promptly, and in any event within 60
days after receipt by the Corporation of the written request of the
Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines, by clear and convincing evidence, within such 60-day
period, that the Indemnitee did not meet the applicable standard of conduct
set forth in Section 1 or 2, as the case may be. Such determination shall be
made in each instance by (a) a majority vote of a quorum of the directors of
the Corporation consisting of persons who are not at that time parties to
the action, suit or proceeding in question ("disinterested directors"), (b)
if no such quorum is obtainable, a majority vote of a committee of two or
more disinterested directors, (c) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors
voting as a single class, which quorum shall consist of stockholders who are
not at that time parties to the action, suit, or proceeding in question, (d)
independent legal counsel (who may be regular legal counsel to the
Corporation) or (e) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by
this ARTICLE TWELFTH shall be enforceable by the Indemnitee in any court of
competent jurisdiction if the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within the 60-day period
referred to above in Section 6. Unless otherwise provided by law, the burden
of proving that the Indemnitee is not entitled to indemnification or
advancement of expenses under this ARTICLE TWELFTH shall be on the
Corporation. Neither the failure of the Corporation to have made a
determination prior to the commencement of such action that indemnification
is proper in the circumstances because the Indemnitee has met the applicable
standard of conduct, nor an actual determination by the Corporation pursuant
to Section 6 that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct. The Indemnitee's
expenses (including attorneys' fees) incurred in connection with
successfully establishing his right to indemnification, in whole or in part,
in any such proceeding shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment termination or repeal of this
ARTICLE TWELFTH or of the relevant provisions of the General Corporation
Law of the State of Delaware or any other applicable laws shall affect or
diminish in any way the rights of any Indemnitee to indemnification under
the provisions hereof with respect to an action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or
facts occurring prior to the final adoption of such amendment, termination
or repeal.
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9. Other Rights. The indemnification and advancement of expenses provided
by this ARTICLE TWELFTH shall not be deemed exclusive of any other rights to
which an Indemnitee seeking indemnification or advancement of expenses may be
entitled under any law (common or statutory), agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in any other capacity while holding office for the
Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs,
executors and administrators of the Indemnitee. Nothing contained in this
ARTICLE TWELFTH shall be deemed to prohibit, and the Corporation is specific
authorized to enter into, agreements with officers and directors providing
indemnification rights and procedures different from those set forth in this
ARTICLE TWELFTH. In addition, the Corporation may, to the extent authorized from
time to time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving the Corporation
and such rights may be equivalent to, or greater or less than, those set forth
in this ARTICLE TWELFTH.
10. Partial Indemnification. If an Indemnitee is entitled under any
provision of this ARTICLE TWELFTH to indemnification by the Corporation for some
or a portion of the expenses (including attorneys' fees), judgments, fines or
amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with any action, suit, proceeding or investigation and any
appeal therefrom but not, however, for the total amount thereof, the Corporation
shall nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments. fines, or amounts paid settlement to
which the Indemnitee is entitled.
11. Insurance. The Corporation may purchase and maintain insurance, at its
expense. to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any benefit plan) against any expense, liability or loss
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the General Corporation Law of the
State of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this ARTICLE TWELFTH with respect to any action, suit,
proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the date of such merger or
consolidation.
13.Savings Clause. If this ARTICLE TWELFTH or any portion here shall be
invalidated on any ground by any Court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the
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fullest extent permitted by any applicable portion of this ARTICLE TWELFTH that
shall not have be invalidated and to the fullest extent permitted by applicable
law.
14. Definitions. Terms used herein and defined in Section 145(h)
Section 145(i) of the General Corporation Law of the State of Delaware
shall have respective meanings assigned to such terms in such Section
l45(h) and Section 145(i).
15. Subsequent Legislation. If the General Corporation Law of the
State of Delaware is amended after adoption of this ARTICLE TWELFTH to
expand further the indemnification permitted to Indemnitees, then the
Corporation shall indemnify such persons to the fullest extent permitted by
the General Corporation of State of Delaware, as so amended.
-22-
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTGEN PHARMACEUTICALS, INC.
SCRIPTGEN PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
FIRST: That, pursuant to the provisions of Sections 141 and 242 of the
General Corporation Law of the State of Delaware, the Board of Directors, by
unanimous written consent dated May 13, 1996, adopted the following
resolution:
VOTED: That it is hereby proposed and declared advisable to amend the
Amended and Restated Certificate of Incorporation of the
Corporation, as amended, to read substantially in the form
attached hereto as Exhibit A.
SECOND: That the shareholders of the Corporation, in accordance with
Sections 228 and 242 of the General Corporation Law of the State of Delaware,
by written consents dated as of March 13, 1996, approved the amendments of
the Corporation's Amended and Restated Certificate of Incorporation, as
amended, as set forth above.
IN WITNESS WHEREOF, SCRIPTGEN PHARMACEUTICALS, INC. has caused this
Certificate of Amendment to the Amended and Restated Certificate of
Incorporation to be signed by its Vice President and attested by its
Secretary this 17th day of May, 1996.
By: /s/ Michael G. Palfreyman
----------------------------------------------
Michael G. Palfreyman, Vice President
Attest: /s/ Karen A. Hamlin
-------------------------
Karen A. Hamlin, Secretary
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
SCRIPTGEN PHARMACEUTICALS, INC.
SCRIPTGEN PHARMACEUTICALS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
1. The name of the Corporation is SCRIPTGEN Pharmaceuticals, Inc. The
corporation was originally incorporated under the name ScripTech
Pharmaceuticals, Inc. and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
September 17, 1992.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate
of Incorporation of the Corporation as heretofore supplemented or amended.
3. The text of the Amended and Restated Certificate of Incorporation as
heretofore amended or supplemented is hereby restated and further amended to
read in its entirety as follows:
ARTICLE FIRST: The name of the corporation is SCRIPTGEN Pharmaceuticals,
Inc. (the "Corporation").
ARTICLE SECOND: The address of the registered office of the Corporation
in the State of Delaware shall be 1209 Orange Street, Wilmington, County of
New Castle, Delaware 19801 and the name of its registered agent at such
address shall be The Corporation Trust Company.
ARTICLE 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.
ARTICLE FOURTH: The total number of shares which the Corporation shall
have authority to issue is (i) Thirty Million (30,000,000) shares of Common
Stock, with a par value of one cent ($.01) per share (the "Common Stock"),
and (ii) Twenty-One Million Five Hundred Thousand (21,500,000) shares of
Preferred Stock, with a par value of one cent ($.01) per share (the
"Preferred Stock"). The Preferred Stock may be issued from time to time in
one or more series. All shares of any one series of Preferred Stock shall be
identical in all respects. Originally, Five Million One Hundred Thousand
(5,100,000) shares of Preferred Stock shall be designated as Series C
Preferred Stock (the "Series C Preferred Stock"), Nine Million Seven
Hundred Thousand (9,700,000) shares of Preferred Stock shall be designated as
Series B Preferred Stock (the "Series B Preferred Stock") and Six Million
Seven Hundred Thousand (6,700,000) shares of Preferred Stock shall be
designated as Series A Preferred Stock (the "Series A Preferred Stock"). The
rights, preferences, privileges and restrictions granted to and imposed upon
the Series C Preferred Stock, the Series B Preferred Stock, the Series A
Preferred Stock and the Common Stock are set forth below in this ARTICLE
FOURTH.
1. Dividends.
1.1. Dividends on Series C Preferred Stock. The holders of the Series C
Preferred Stock shall be entitled to receive dividends when, as and if
declared by the Board of Directors of the Corporation (the "Board of
Directors") out of funds legally available therefor.
1.2 Dividends on Series B Preferred Stock. The holders of the Series B
Preferred Stock shall be entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor;
provided, however, that no dividend shall be declared or paid on the Series B
Preferred Stock unless the Corporation shall simultaneously declare and pay
an equal dividend on each outstanding share of Series C Preferred Stock (as
calculated by assuming the conversion of all shares of Series C Preferred
Stock, Series B Preferred Stock and Series A Preferred Stock into shares of
Common Stock pursuant to the provisions of Section 4 of this ARTICLE FOURTH
immediately prior to the payment of such dividend).
1.3. Dividends on Series A Preferred Stock. The holders of the Series A
Preferred Stock shall be entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor;
provided, however, that no dividend shall be declared or paid on the Series A
Preferred Stock unless the Corporation shall simultaneously declare and pay
an equal dividend on each outstanding share of Series C Preferred Stock and
each outstanding share of Series B Preferred Stock (as calculated by assuming
the conversion of all shares of Series C Preferred Stock, Series B Preferred
Stock and Series A Preferred Stock into shares of Common Stock pursuant to
the provisions of Section 4 of this ARTICLE FOURTH immediately prior to the
payment of such dividend).
1.4. Dividends on Common Stock. The holders of the Common Stock shall
be entitled to receive dividends when, as and if declared by the Board of
Directors out of funds legally available therefor; provided, however, that no
dividend shall be declared or paid on the Common Stock unless the Corporation
shall simultaneously declare and pay an equal dividend on each outstanding
share of Series C Preferred Stock, each outstanding share of Series B
Preferred Stock and each outstanding share of Series A Preferred Stock (as
calculated by assuming the conversion of all shares of Series C Preferred
Stock, Series B Preferred Stock and Series A Preferred Stock into shares of
Common Stock pursuant to the provisions of Section 4 of this ARTICLE FOURTH
immediately prior to the payment of such dividend).
-2-
2. Liquidation, Reorganization and Distributions.
2.1. Liquidation, Dissolution and Winding-Up. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary
or involuntary, distributions to the stockholders of the Corporation shall be
made in the following manner:
(a) The holders of the Series C Preferred Stock shall receive, prior
and in preference to any distribution of any of the assets of the
Corporation to the holders of the Common Stock, an amount equal to $1.80
per share of Series C Preferred Stock (which amounts shall be subject to
equitable adjustment as determined in good faith by the Board of
Directors whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Series C Preferred
Stock) held by each of them, plus an amount equal to all declared but
unpaid dividends on such share of Series C Preferred Stock, if any, to
and including the date full payment of such preferential amount shall be
tendered with respect to such share of Series C Preferred Stock to the
holder of such share of Series C Preferred Stock, in connection with such
liquidation, dissolution or winding up (the "Series C Preferential
Amount").
(b) The holders of the Series B Preferred Stock shall receive, prior
and in preference to any distribution of any of the assets of the
Corporation to the holders of the Common Stock, an amount equal to $1.00
per share of Series B Preferred Stock (which amounts shall be subject to
equitable adjustment as determined in good faith by the Board of
Directors whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Series B Preferred
Stock) held by each of them, plus an amount equal to all declared but
unpaid dividends on such share of Series B Preferred Stock, if any, to
and including the date full payment of such preferential amount shall be
tendered with respect to such share of Series B Preferred Stock to the
holder of such share of Series B Preferred Stock, in connection with such
liquidation, dissolution or winding up (the "Series B Preferential
Amount").
(c) The holders of the Series A Preferred Stock shall receive, prior
and in preference to any distribution of any of the assets of the
Corporation to the holders of the Common Stock, an amount equal to $1.00
per share of Series A Preferred Stock (which amounts shall be subject to
equitable adjustment as determined in good faith by the Board of
Directors whenever there shall occur a stock split, combination,
reclassification or other similar event involving the Series A Preferred
Stock) held by each of them, plus an amount equal to all declared but
unpaid dividends on such share of Series A Preferred Stock, if any, to
and including the date full payment of such preferential amount shall be
tendered with respect to such share of Series A Preferred Stock to the
holder of such share of Series A Preferred Stock, in connection with such
liquidation, dissolution or winding up (the "Series A Preferential
Amount").
-3-
(d) If the assets of the Corporation legally available for
distribution to the holders of the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock shall be insufficient to
permit the payment in full to all such holders of the full aforesaid
preferential amounts, then the entire assets of the Corporation legally
available for such distribution shall be distributed ratably among such
holders in accordance with the aggregate liquidation preference of the
shares of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock held by each of them.
(e) If payment has been made to the holders of the Series C
Preferred Stock, the holders of the Series B Preferred Stock and the
holders of the Series A Preferred Stock of the full amount to which they
shall be entitled pursuant to Sections 2.1(a), (b) and (c) of this
ARTICLE FOURTH, the holders of the Series A, B and C Preferred Stock
(each share of which shall be treated for purposes of this Section 2.1(e)
as the number of shares of Common Stock into which such share could then
be converted pursuant to Section 4 of this ARTICLE FOURTH) and the
holders of the Common Stock shall then be entitled to share ratably in
the Corporation's remaining assets, based on the number of shares of
Common Stock held (or deemed to be held) by each of them.
2.2. Treatment of Reorganizations. In the event of any Reorganization
(as defined below) of the Corporation, each holder of the Corporation's
capital stock shall be entitled to receive for his, her or its shares of such
capital stock the following:
(a) The holders of the Series C Preferred Stock shall receive, prior
and in preference to any payment for any share of Common Stock, the
Series C Preferential Amount, the holders of the Series B Preferred Stock
shall receive, prior and in preference to any payment for any share of
Common Stock, the Series B Preferential Amount and the holders of the
Series A Preferred Stock shall receive, prior and in preference to any
payment for any share of Common Stock, the Series A Preferential Amount.
If the aggregate amount to be paid pursuant to this Section 2.2(a) of
this ARTICLE FOURTH shall be insufficient to permit the payment in full
to all such holders of the full aforesaid preferential amounts, then the
entire amount to be paid pursuant to the Reorganization shall be
distributed ratably among such holders in accordance with the aggregate
preferential amounts for the shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock held by each of them.
(b) If payment has been made to the holders of the Series C
Preferred Stock, the holders of the Series B Preferred Stock and the
holders of the Series A Preferred Stock of the full amount to which they
shall be entitled pursuant to Section 2.2(a) of this ARTICLE FOURTH, the
holders of the Common Stock shall then be entitled to share ratably in
the remaining amount to be paid pursuant to the Reorganization, based on
the number of shares of Common Stock held by each of them, up to an
aggregate amount equal to $1,800,000. If such remaining amount to be
paid pursuant to the Reorganization
-4-
shall be insufficient to permit the payment in full to all such holders
of the full aforesaid amount of $1,800,000, the entire remaining amount
to be paid pursuant to the Reorganization shall be distributed ratably
among such holders.
(c) If payment has been made to the holders of the Series C
Preferred Stock, the holders of the Series B Preferred Stock and the
holders of the Series A Preferred Stock of the full amount to which they
shall be entitled pursuant to Section 2.2(a) of this ARTICLE FOURTH, and
if payment has been made to the holders of the Common Stock of the full
amount to which they shall be entitled pursuant to Section 2.2(b) of this
ARTICLE FOURTH, the holders of the Series A, B and C Preferred Stock
(each share of which shall be treated for purposes of this Section 2.2(c)
as the number of shares of Common Stock into which such share could then
be converted pursuant to Section 4 of this ARTICLE FOURTH) and the
holders of the Common Stock shall then be entitled to share ratably in
the final remaining amount to be paid pursuant to the Reorganization,
based on the number of shares of Common Stock held (or deemed to be held)
by each of them.
(d) For purposes of this Section 2.2, "Reorganization" shall mean
any merger or consolidation of the Corporation into or with any other
corporation or entity or any sale, lease or exchange of all or
substantially all of the assets of the Corporation, unless the
stockholders of the Corporation immediately prior thereto shall,
immediately thereafter, hold as a group the right to cast not less than
51% of the votes of all holders of voting securities of the resulting or
surviving corporation or entity on any matter on which any such holders
of voting securities shall be entitled to vote, in which case, such event
shall not be deemed to be a Reorganization for the purposes of this
Section 2.2.
2.3. Distribution Other Than Cash. Whenever the distribution provided
for in this Section 2 shall be payable in property other than cash, the value
of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors; provided, however, that
if the holders of 25% of the then outstanding shares of Series C Preferred
Stock voting as a single class (the "Contesting Holders"), notify the Board
of Directors within five business days after receiving written notification
of such determination of fair market value that they disagree with such
determination, then the Board of Directors and the Contesting Holders shall
have 30 days to agree upon a fair market value of the relevant property. If,
by the end of such 30-day period they are unable to agree on a fair market
value, the fair market value shall be determined by an appraisal to be paid
for by the Corporation. All appraisals shall be undertaken by two
appraisers, one selected by the Corporation and one selected by the
Contesting Holders, which selections must be made within 10 days after the
expiration of the 30-day period described above. If one selecting party
fails to timely select its appraiser, the other selecting party shall select
both appraisers. The fair market value shall be the fair market value
arrived at by those appraisers within 60 days following the appointment of
the last appraiser to be appointed. In the event that the two appraisers
cannot agree on such fair market
-5-
value within such a period of time, (i) if the appraisers' valuations are
within 10% of each other the fair market value shall be the average of the
two valuations and (ii) if the differences in the valuations are greater, the
appraisers shall elect a third appraiser who will calculate fair market value
independently, and, except as provided in the next sentence, the fair market
value of the property shall in each case be the average of the two fair
market values arrived at by the appraisers who are closest in amount. If one
appraiser's valuation is the average of the other two valuations, the average
valuation shall be the fair market value. In the event that the two original
appraisers cannot agree upon a third appraiser within 30 days following the
end of the 60-day period referred to above, then the third appraiser shall be
appointed by the American Arbitration Association.
3. Voting.
3.1. General. Except as otherwise expressly provided in Section 3.2 of
this ARTICLE FOURTH, or as required by law, (a) each holder of Common Stock
shall be entitled to vote on all matters and shall be entitled to one vote
for each share of Common Stock standing in such holder's name on the books of
the Corporation, (b) each holder of Series C Preferred Stock, each holder of
Series B Preferred Stock and each holder of Series A Preferred Stock shall be
entitled to vote on all matters and shall be entitled to that number of votes
equal to the number of whole shares of Common Stock into which such holder's
shares of Preferred Stock could then be converted as of the record date for
the determination of stockholders entitled to vote on such matters (or, if no
record date is established, at the date such vote is taken or written consent
solicited) and pursuant to Section 4 of this ARTICLE FOURTH. Except as
otherwise expressly provided herein, or as required by law, the holders of
shares of Common Stock, Series A Preferred Stock, Series B Preferred and
Series C Preferred Stock shall vote together as a single class on all matters.
3.2. Certain Transactions.
(a) The Corporation shall not, without the written consent or
affirmative vote of the holders of at least 75% of the then outstanding
shares of Series C Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class:
(i) Amend, alter or repeal the preferences, special rights or
other powers of the Series C Preferred Stock;
(ii) Amend, alter or repeal the preferences, special rights or
other powers of the Series A Preferred Stock or the Series B Preferred Stock,
or otherwise amend, alter or repeal any provision of the Amended and Restated
Certificate of Incorporation or the Corporation's By-Laws, in either such
case so as to affect adversely the Series C Preferred Stock; and
-6-
(iii) Reclassify any shares of Common Stock into shares having
preference to or special rights and other powers superior to the Series C
Preferred Stock.
(b) The Corporation shall not, without the written consent or
affirmative vote of the holders of at least 75% of the then outstanding
shares of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be), voting separately as a single class:
(i) Authorize, reclassify, issue or enter into any agreement
providing for the issuance (contingent or otherwise) of any securities having
equity features and which rank on a parity with or senior to any of the
Series A Preferred Stock, the Series B Preferred Stock or the Series C
Preferred Stock with respect to the payment of dividends or upon liquidation
or other distribution of assets, or with a conversion price lower than that
of the Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, or having other terms more favorable than those of the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock;
(ii) Merge with or into or consolidate with any other
corporation, or sell, lease, license or otherwise dispose of all or
substantially all of its properties or assets;
(iii) Change the size or the election procedure for the Board
of Directors; and
(iv) Directly or indirectly redeem, purchase or otherwise
acquire any of the Corporation's equity securities, other than pursuant to
Section 6 of this ARTICLE FOURTH, or pursuant to any stock option or
agreement entered into by the Corporation and approved by a majority of the
Corporation's directors designated by the holders of Preferred Stock.
4. Conversion.
4.1. Optional Conversion. The holders of Preferred Stock shall have
conversion rights as follows:
(a) Right to Convert.
(i) Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time
to time into the number of fully paid and nonassessable shares of Common
Stock of the Corporation as is determined by dividing $1.80 by the Current
Conversion Price (as defined in paragraph (c) below) in effect at the time of
conversion. Each share of Series A Preferred Stock and each share of Series
B Preferred Stock shall be convertible, at the option of the holder thereof,
at any time and from time to time into the number of fully paid and
nonassessable shares of Common Stock of the Corporation as is
-7-
determined by dividing $1.00 by the Current Conversion Price (as defined in
paragraph (c) below) in effect at the time of conversion. The conversion
price at which shares of Common Stock shall be deliverable upon conversion of
Series C Preferred Stock without the payment of additional consideration by
the holder thereof shall initially be $1.80, subject to adjustment as
provided in paragraph (c) below. The conversion price at which shares of
Common Stock shall be deliverable upon conversion of Series B Preferred Stock
and Series A Preferred Stock without the payment of additional consideration
by the holder thereof shall initially be $1.00, subject to adjustment as
provided in paragraph (c) below.
(ii) No fractional shares of Common Stock shall be issued upon
conversion of shares of Preferred Stock. In lieu of any fractional share to
which the holder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being converted, the Corporation shall pay cash equal to
such fraction multiplied by the then Current Conversion Price.
(b) Mechanics of Conversion.
(i) In order for a holder of Preferred Stock to convert shares
of Preferred Stock into shares of Common Stock, such holder shall surrender
the certificate or certificates for such shares of Preferred Stock, at the
office of the transfer agent for the Preferred Stock (or at the principal
office of the Corporation if the Corporation serves as its own transfer
agent), together with written notice that such holder elects to convert all
or any number of the shares of Preferred Stock represented by such
certificate or certificates. Such notice shall state such holder's name or
the names of the nominees in which such holder wishes the certificate or
certificates for Shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or
his, her or its attorney duly authorized in writing. The date of receipt of
such certificates and notice by the transfer agent (or by the Corporation if
the Corporation serves as its own transfer agent) shall be the conversion
date (the "Conversion Date"). The Corporation shall, as soon as practicable
after the Conversion Date, issue and deliver at such office to such holder of
Preferred Stock, or to his, her or its nominees, a certificate or
certificates for the number of whole shares of Common Stock (and any shares
of Preferred Stock represented by the certificate or certificates delivered
to the Corporation by the holder thereof which are not converted into Common
Stock) issuable upon such conversion in accordance with the provisions
hereof, together with cash in lieu of fractional shares calculated in
accordance with subparagraph (ii) of paragraph (a) above. Such conversion
shall be deemed to have been made immediately prior to the close of business
on the date of such surrender of certificates of Preferred Stock to be
converted, and the person or persons entitled to receive shares of Common
Stock issuable upon conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on that date.
-8-
(ii) The Corporation shall at all times when the Preferred
Stock shall be outstanding, reserve and keep available out of its authorized
but unissued stock, for the purpose of effecting the conversion of the
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock. Before taking any action which would
cause Common Stock, upon the conversion of Preferred Stock, to be issued
below the then par value of the shares of Common Stock, the Corporation will
take any corporate action which may, in the opinion of its counsel be,
necessary in order that the Corporation may validly and legally issue fully
paid and nonassessable shares of Common Stock to the holders of Preferred
Stock. The Corporation will not close its books against the transfer of the
Preferred Stock or of Common Stock issued or issuable upon conversion of the
Preferred Stock in any manner which interferes with the timely conversion of
the Preferred Stock.
(iii) All shares of Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall immediately cease and terminate
on the Conversion Date, except only the right of the holders thereof to
receive shares of Common Stock in exchange therefor and payment of any
declared and unpaid dividends thereon. On and as of the Conversion Date, the
shares of Common Stock issuable upon such conversion shall be deemed to be
outstanding, and the holder thereof shall be entitled to exercise and enjoy
all rights with respect to such shares of Common Stock, including the rights,
if any, to receive notices and to vote. All certificates representing shares
of Preferred Stock, from and after the Conversion Date, shall be deemed to
have been retired and canceled and shall not be reissued, and the Corporation
may thereafter take such appropriate action as may be necessary to reduce
accordingly the authorized number of shares of Preferred Stock.
(c) Adjustments to Conversion Price. The initial conversion prices
as stated in subparagraph (i) of paragraph (a) above shall be subject to
adjustment from time to time and such conversion prices as adjusted shall
likewise be subject to further adjustment, all as hereinafter set forth. The
term "Current Conversion Price" shall mean, as of any time, the conversion
price of the Series C Preferred Stock or the Series A or B Preferred Stock,
as the case may be, at that time, as specified in paragraph (a) above in case
no adjustment shall have been required, or such conversion price as adjusted
pursuant to this paragraph (c), as the case may be.
(i) If at any time after the date of issuance of the Preferred
Stock the Corporation shall issue (x) any shares of Common Stock other than
(A) Excluded Stock (as defined in subparagraph (vii) below), (B) Common Stock
issued or issuable upon conversion of the Preferred Stock or (C) by way of
dividend or other distribution on shares of Common Stock referred to in the
foregoing clauses (A) and (B), or (y) any shares of a class or series
convertible into Common Stock, other than the Preferred Stock (collectively,
with the Common Stock, such
-9-
"Securities"), for a consideration per share (the consideration in each case
to be determined in the manner provided in (E) and (F) of subparagraph (ii)
below) less than the Current Conversion Price in effect immediately prior to
the issuance of such Securities, the Current Conversion Price in effect
immediately prior to each such issuance shall forthwith (except as provided
in subparagraph (ii) below) be adjusted to a Current Conversion Price
obtained by dividing an amount equal to the sum of
(x) the total number of shares of Common Stock outstanding
(including the number of shares of Common Stock into which the
outstanding shares of Preferred Stock and other securities
convertible into Preferred Stock are then directly or
indirectly convertible) immediately prior to such issuance
multiplied by the Current Conversion Price in effect
immediately prior to such issuance, plus
(y) the consideration received by the Corporation upon such
issuance,
by
(z) the total number of shares of Common Stock outstanding
(including the number of shares of Common Stock into which the
outstanding shares of Preferred Stock or other securities
convertible into Preferred Stock are then directly or
indirectly convertible) immediately after such issuance
(including the number of shares of Common Stock into which such
newly issued Securities are then convertible).
(ii) For the purpose of any adjustment of the conversion price
pursuant to subparagraph (c)(i) above, the following provisions shall be
applicable:
(A) In the case of the issuance of options or warrants to purchase or
rights to subscribe for Common Stock other than Excluded Stock
(collectively, "Rights"), the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such Rights shall be
deemed to have been issued at the time such Rights were issued, for
a consideration equal to the consideration (determined in the manner
provided in (E) and (F) below), if any, received by the Corporation
on the issuance of such Rights, plus the minimum purchase price
provided in such Rights for the Common Stock covered thereby;
provided that such shares of Common Stock deliverable upon the
exercise of such Rights shall not be deemed to have been issued
unless such consideration per share would be less than the Current
Conversion Price in effect on the date of and immediately prior to
such issue. No further adjustment of the Current Conversion Price
adjusted upon the issuance of such Rights shall be made as a result
of the actual issuance of shares of Common Stock deliverable upon
exercise of such Rights.
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(B) In the case of the issuance of securities by their terms convertible
into or exchangeable for Common Stock other than Excluded Stock
(collectively, "Convertible Securities"), or options or warrants to
purchase or rights to subscribe for securities by their terms
convertible or exchangeable for Common Stock other than Excluded
Stock (collectively, "Related Rights"), the aggregate maximum number
of shares of Common Stock deliverable upon conversion, exchange or
exercise of any such Convertible Securities or such Related Rights
shall be deemed to have been issued at the time such Convertible
Securities or such Related Rights were issued and for a
consideration equal to the consideration received by the Corporation
upon issuance of such Convertible Securities or such Related Rights
(excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to be
received by the Corporation upon the conversion, exchange or
exercise of such Convertible Securities or Related Rights (the
consideration in each case to be determined in the manner provided
in (E) and (F) below); provided that such shares of Common Stock
deliverable upon such conversion, exchange or exercise of such
Convertible Securities or Related Rights shall not be deemed to have
been issued unless such consideration per share would be less than
the Current Conversion Price in effect on the date of and
immediately prior to such issue. No further adjustment of the
Current Conversion Price adjusted upon the issuance of such Related
Rights shall be made as a result of the actual issuance of such
Convertible Securities deliverable upon exercise of such Related
Rights.
(C) On any change in the number of shares of Common Stock deliverable
upon the exercise of such Rights or Related Rights or upon the
conversion, exchange or exercise of such Convertible Securities or
on any change in the minimum purchase price of such Rights, Related
Rights or Convertible Securities other than a change resulting from
the anti-dilution provisions of such Rights, Related Rights or
Convertible Securities, the Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have been
obtained had the adjustment made upon the issuance of such Rights,
Related Rights or Convertible Securities not converted, exchanged or
exercised prior to such change, been made upon the basis of such
change.
(D) On the expiration of any such Rights, Related Rights or Convertible
Securities, the Current Conversion Price shall forthwith be
readjusted to such Current Conversion Price as would have obtained
had the adjustment made upon the issuance of such Rights or Related
Rights or the conversion, exchange or exercise of any such
Convertible Securities been made upon the basis of the issuance of
only the number of shares of Common Stock actually issued upon the
exercise of such Rights or Related Rights or the conversion,
exchange or exercise of any such Convertible Securities.
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(E) In the case of the issuance of such Securities for cash, the
consideration shall be deemed to be the amount of cash paid
therefor (excluding amounts paid for accrued interest or accrued
dividends).
(F) In the case of the issuance of such Securities for a consideration
in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined in
good faith by the Board of Directors of the Corporation.
(iii) If the Corporation declares a dividend or other
distribution payable in such Securities or subdivides its outstanding shares
of Common Stock into a larger number or combines its outstanding shares of
Common Stock into a smaller number, then the Current Conversion Price in
effect immediately prior to such dividend, other distribution, subdivision or
combination, as the case may be, shall forthwith be adjusted to that price
determined by multiplying the Current Conversion Price by a fraction (x) the
numerator of which shall be the total number of outstanding shares of such
Securities immediately prior to such dividend, other distribution,
subdivision or combination and (y) the denominator of which shall be the
total number of outstanding shares of such Securities immediately after such
dividend, other distribution, subdivision or combination.
(iv) In case the Corporation shall declare a dividend or
otherwise distribute to the holders of its Common Stock shares of its capital
stock (other than such Securities), stock or other securities of other
persons, evidences of indebtedness issued by the Corporation or other
persons, assets (excluding cash dividends) or options, warrants or rights
(excluding such Rights or Related Rights), then, in each such case,
immediately following the record date fixed for the determination of the
holders of Common Stock entitled to receive such dividend or distribution,
the Current Conversion Price in effect thereafter shall be determined by
multiplying the Current Conversion Price in effect immediately prior to such
record date by a fraction (A) the numerator of which shall be an amount equal
to the remainder of (x) the Current Market Price (as defined in subparagraph
(viii) below) determined immediately prior to such distribution of one share
of Common Stock less (y) the fair value (as determined in good faith by the
Corporation's Board of Directors) of the stock, securities, evidences of
indebtedness, assets, options, warrants or rights so dividended or
distributed in respect of one share of Common Stock, as the case may be, and
(B) the denominator of which shall be the Current Market Price of one share
of Common Stock determined immediately prior to such dividend or
distribution. Such adjustment shall be made on the date such dividend or
distribution is made, and shall become effective at the opening of business
on the business day following the record date for the determination of
stockholders entitled to such dividend or distribution.
(v) In the event the Corporation is in arrears with respect to the
payment of any dividend or portion thereof declared but unpaid on shares of
Preferred Stock, at the time a holder elects to convert such shares of
Preferred Stock, the Current Conversion Price in effect
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immediately prior to such conversion shall forthwith be reduced (but only
with respect to the shares of Preferred Stock being so converted) by an
amount equal to the quotient of (x) the aggregate arrearage per share of
Preferred Stock being converted, divided by (y) the number of shares of
Common Stock into which such share of Preferred Stock being converted is then
convertible; provided, however, that the application of the foregoing shall
not reduce the Current Conversion Price below $.01.
(vi) Whenever the Current Conversion Price shall be adjusted as
provided in this Section 4, the Corporation shall forthwith file, at the
office of the transfer agent for the Preferred Stock, at the principal office
of the Corporation or at such other place as may be designated by the
Corporation, a statement, certified by the chief financial officer of the
Corporation, showing in detail the facts requiring such adjustment and the
Current Conversion Price that shall be in effect after such adjustment. The
Corporation shall also cause a copy of such statement to be sent by first
class mail, postage prepaid, to each holder of record of Preferred Stock at
such holder's address as shown in the records of the Corporation.
(vii) As used in this paragraph (c), "Excluded Stock" shall mean
(x) up to 4,850,000 shares (such amount to be appropriately adjusted in the
event of any stock dividend, stock split or combination, or similar
recapitalization affecting the Common Stock) of Common Stock or options for
the purchase thereof issued, sold or granted, in the past or future, by the
Corporation to its employees, directors or consultants pursuant to bona fide
employee stock purchase, option or similar benefit plans or other incentive
programs or compensation arrangements approved by the Board of Directors of
the Corporation, as more fully detailed in Section 7.14 of the Series A Stock
Purchase Agreement and (y) options for the purchase of up to 555,555 shares
(such amount to be appropriately adjusted in the event of any stock dividend,
stock split or combination, or similar recapitalization affecting the Common
Stock) of Common Stock, and the shares of Common Stock issuable upon the
conversion thereof, granted, in the past or future, by the Corporation to its
employees substantially in such form as approved by the Board of Directors of
the Corporation.
(viii) For the purpose of any computation pursuant to, subparagraph
(iv) above, the "Current Market Price" at any date of one share of Common
Stock shall be deemed to be the average of the daily closing prices for the
30 consecutive business days ending 15 business days before the date in
question (as adjusted for any stock splits, stock dividends, combinations or
recapitalization that took effect during such 30 business-day period). The
closing price for each day shall be the last reported sales price on such day
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or if not listed or admitted to trading
national securities exchange, the average of the last reported bid and asked
prices as reported by the National Association of Securities Dealers
Automated Quotation System, Inc., all as adjusted for stock splits, stock
dividends, combinations or similar recapitalization that took effect during
such 30 business-day period; provided, however, that if the Common Stock is
not traded in such a manner that the quotations referred to in this
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subparagraph (viii) are available for the period required hereunder, the
Current Market Price shall be deemed to be the fair value of such Common
Stock as determined in good faith by the Board of Directors of the
Corporation.
(ix) If any event occurs of the type contemplated by the provisions
of this Section 4 but not expressly provided for by such provisions, then the
Directors will make an appropriate adjustment in the Current Conversion Price
as to protect the rights of the holders of the Preferred Stock; provided that
no such adjustment will increase the Current Conversion Price except as
otherwise permitted pursuant to subparagraph (iii) above or subparagraph
(c)(ii)(D) of this Section 4 or decrease the number of shares of Common Stock
issuable upon conversion.
4.2. Mandatory Conversion.
(a) Upon the earlier to occur of (i) the closing of an underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale by the
Corporation of Common Stock to the public at a minimum price per share of
$7.00 resulting in aggregate gross proceeds to the Corporation of not less
than $10,000,000, and (ii) the written consent or affirmative vote of the
holders of not less than 85% of the then outstanding shares of Preferred
Stock, given in writing or by vote at a meeting, all shares of Series C
Preferred Stock then outstanding shall automatically be converted into such
number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $1.80 by the Current Conversion Price then in effect
pursuant to Section 4.1 of this ARTICLE FOURTH, subpart (b) and all shares of
Series A Preferred Stock and Series B Preferred Stock then outstanding shall
automatically be converted into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $1.00 by the Current
Conversion Price then in effect pursuant to Section 4.1 of this ARTICLE
FOURTH, subpart (b).
(b) No fractional shares of Common Stock shall be issued upon
conversion of shares of Preferred Stock. In lieu of any fractional share to
which the holder would otherwise be entitled after determination of the
aggregate full number of shares of Common Stock issuable in respect of the
Preferred Stock then being converted, the Corporation shall pay cash equal to
such fraction multiplied by the then Current Conversion Price.
(c) All holders of record of shares of Preferred Stock will be
given at least 10 but not more than 30 days' prior written notice of the date
fixed (the "Mandatory Conversion Date") and the place designated for
mandatory conversion of all shares of Preferred Stock pursuant to this
Section 4.2. Such notice will be sent by first class or registered mail,
postage prepaid, to each record holder of Preferred Stock at such holder's
address last shown on the records of the transfer agent for the Preferred
Stock (or the records the Corporation if it serves as its own transfer
agent). On or before the Mandatory Conversion Date, each holder of shares of
Preferred Stock shall surrender his, her or its certificate or certificates
for all such shares to the Corporation at the place designated in such
notice. If required by the Corporation,
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certificates surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or his, her or its
attorney duly authorized in writing. On and after the Mandatory Conversion
Date, all rights with respect to the Preferred Stock, including the rights,
if any, to receive notices and vote, will terminate, except only the rights
of the holders thereof, upon surrender of their certificate or certificates
therefor, to receive certificates for the number of shares of Common Stock
into which such Preferred Stock has been converted and payment of any
declared but unpaid dividends thereon. As soon as practicable after the
Mandatory Conversion Date and upon the surrender of the certificate or
certificates representing shares of Preferred Stock, the Corporation shall
issue and deliver to such holder, or on his, her or its written order, a
certificate or certificates for the number of whole shares of Common Stock
issuable under such conversion in accordance with the provisions hereof,
together with cash as provided in subparagraph (b) of this Section 4.2 in
respect of any fraction of a share of Common Stock otherwise issuable upon
such conversion.
(d) All certificates evidencing shares of Preferred Stock which are
required to be surrendered in accordance with this Section 4.2, from and
after the Mandatory Conversion Date, shall be deemed to have been retired and
canceled, and the shares of Preferred Stock represented thereby, converted
into Common Stock, notwithstanding the failure of the holder or holders
thereof to surrender such certificates on or prior to such date, The
Corporation may then take such appropriate action as may be necessary to
reduce accordingly the authorized number of shares of Preferred Stock.
5. Redemption. The shares of Preferred Stock shall be redeemed as follows:
5.1. Mandatory Redemption. On January 15th in each of the years 2004 and
2005 (each a "Redemption Date"), the Corporation shall redeem 50% of the then
outstanding shares of Preferred Stock at a per share price of $1.80 for each
share of Series C Preferred Stock and $1.00 for each share of Series A
Preferred Stock and Series B Preferred Stock, plus an amount equal to all
declared but unpaid dividends on such shares (the "Redemption Price") up to
and including the date such shares are redeemed, unless such redemption is
waived by the holders of 75% of the then outstanding shares of Preferred
Stock.
5.2. Payment of Redemption Price. On each Redemption Date, the
Corporation will pay to the holders of the Preferred Stock outstanding at the
time of the redemption an amount equal to the Redemption Price with respect
to each of the shares of Preferred Stock redeemed on such date. If on a
Redemption Date the funds of the Corporation legally available for redemption
of shares of Preferred Stock are insufficient to redeem the number of the
outstanding shares of Preferred Stock that are to be redeemed on such date,
those funds which are legally available will be used to redeem, at the
Redemption Price, the maximum possible number of shares of Preferred Stock on
a pro rata basis among the holders thereof based upon the number of shares of
Common Stock into which such shares of Preferred Stock would be converted.
At any time
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thereafter when additional funds of the Corporation become legally available
for the redemption of Preferred Stock, such funds will immediately be used to
redeem the balance of the shares of Preferred Stock which the Corporation has
become obligated to redeem but which it has not so redeemed. In addition,
any redemption of Preferred Stock shall be made out of any surplus or any
capital whether or not a reduction of capital is thereby involved, and to the
extent provided by law, the Corporation shall take all necessary action to
effect a reduction of capital if such reduction is necessary to provide funds
legally available for any required redemption of Preferred Stock.
5.3. Equitable Adjustment. The Redemption Price set forth in this
Section 5 shall be subject to equitable adjustment whenever there shall occur
a stock split, combination, reclassification or other similar event involving
the Preferred Stock.
5.4. Surrender of Certificates. Not less than 60 days before each
Redemption Date, the Corporation shall mail written notice (the "Redemption
Notice"), postage prepaid, to each holder of record of Preferred Stock at
such holder's address as shown on the records of the Corporation; provided,
however, that the Corporation's failure to give such Redemption Notice shall
in no way affect its obligation to redeem the Preferred Stock as provided in
Section 5.1 of this ARTICLE FOURTH. The Redemption Notice shall contain the
following information:
(i) The number of shares of Preferred Stock held by the holder which
shall be redeemed by the Corporation on such Redemption Date pursuant to the
provisions of Sections 5.1 and 5.2 of this ARTICLE FOURTH.
(ii) The Redemption Date for the shares to be redeemed.
(iii) The address at which the holder may surrender to the Corporation
its certificate or certificates representing shares of Preferred Stock to be
redeemed.
Each holder of shares of Preferred Stock to be redeemed shall surrender
the certificate or certificates representing such shares to the Corporation
at the place specified in the Redemption Notice on or prior to the Redemption
Date designated in the Redemption Notice, and thereupon an amount equal to
the applicable Redemption Price shall be paid to the order of the person
whose name appears on such certificate or certificates. Each surrendered
certificate shall be cancelled and retired.
5.5. Dividends and Conversion after Redemption. From and after the date
on which the Corporation shall have paid in full the Redemption Price with
respect to any shares of Preferred Stock, such shares of Preferred Stock
thereby redeemed shall not be entitled to any further dividends pursuant to
Section 1 of this ARTICLE FOURTH or to the conversion provisions set forth in
Section 4 of this ARTICLE FOURTH.
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6. Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder will be satisfactory) of
the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing one or more shares of Common Stock or Preferred Stock,
and in the case of any such loss, theft or destruction, upon receipt of
indemnity and bond reasonably satisfactory to the Corporation (provided that
if the holder is an institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation will (at its expense) execute and deliver in
lieu of such certificate a new certificate of like kind representing the
number of shares represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
ARTICLE FIFTH: The Corporation is to have perpetual existence.
ARTICLE SIXTH: In addition to, and not by way of limitation of, the
powers granted to the Board of Directors by the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation is expressly
authorized to adopt, amend or repeal all or any of by-laws of the Corporation.
ARTICLE SEVENTH: Elections of directors need not be by written ballot
unless the by-laws of the Corporation shall so provide.
ARTICLE EIGHTH: Meetings of stockholders may be held within or without
the State of Delaware, as the by-laws may provide. The books of the
Corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the by-laws of the
Corporation.
ARTICLE 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 this Corporation or of any creditor or stockholder thereof or
on the application of any receiver or receivers appointed for this
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 stockholder 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 said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be
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binding on all the creditors or class of creditors, and/or on the
stockholders or class of stockholders, of the Corporation, as the case may
be, and also on the Corporation.
ARTICLE TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of
incorporation, in the manner now or hereafter prescribed by statute and by
this Amended and Restated Certificate of Incorporation, and all rights
conferred upon stockholders herein are granted subject to this reservation.
ARTICLE ELEVENTH: To the fullest extent permitted by the General
Corporation Law of the State of Delaware as it now exists or may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation, any of its stockholders or any other person or entity for
monetary damages for breach of fiduciary duty owed to the Corporation, its
stockholders or such other person or entity owing to such director's position
as a director of the Corporation. Any repeal or modification of this ARTICLE
ELEVENTH by the stockholders of the Corporation shall be prospective only,
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification.
ARTICLE TWELFTH:
1. Actions, Suits and Proceedings Other Than By or in the Right of the
Corporation. The Corporation shall indemnify each person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil criminal, administrative
or investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or was, or has agreed to
become, a director or officer of the Corporation, or is or was serving, or
has agreed to serve, at the request of the Corporation, as a director,
officer or trustee of, or in a similar capacity with, another corporation,
partnership, joint venture, trust or other enterprise (including any benefit
plan) (all such persons being referred to hereafter as an"Indemnitee"), or by
reason of any action alleged to have been taken or omitted to have been taken
in such capacity, against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her or on his or her behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in,
or not opposed to, the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his or her conduct was unlawful. Notwithstanding anything to the contrary in
this ARTICLE TWELFTH, except as set forth in Section 6 below, the Corporation
shall not indemnify an Indemnitee seeking
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indemnification in connection with a proceeding (or part thereof) initiated
by the Indemnitee unless the initiation thereof was approved by the Board of
Directors of the Corporation.
2. Actions or Suits By or in the Right of the Corporation. The
Corporation shall indemnify any Indemnitee who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that he is or was, or has agreed to become, a
director or officer of the Corporation, or is or was serving, or has agreed
to serve, at the request of the Corporation, as a director, officer or
trustee of, or in a similar capacity with, another corporation, partnership,
joint venture, trust or other enterprise (including any employee benefit
plan), or by reason of any action alleged to have been taken or omitted to
have been taken in such capacity, against all expenses (including attorneys'
fees) and amounts paid in settlement actually and reasonably incurred by him
or her or on his or her behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests
of the Corporation, except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of such liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses
(including attorneys' fees) which the Court of Chancery of Delaware or such
other court shall deem proper.
3. Indemnification for Expenses of Successful Party. Notwithstanding
the other provisions of this ARTICLE TWELFTH, to the extent that an
Indemnitee has been successful, on the merits or otherwise, in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this ARTICLE
TWELFTH, or in defense of any claim, issue or matter therein, or on appeal
from any such action, suit or proceeding, he shall be indemnified against all
expenses (including attorneys' fees) actually and reasonably incurred by him
or her or on his or her behalf in connection therewith. Without limiting the
foregoing, if any action, suit or proceeding is disposed of, on the merits or
otherwise (including a disposition, without prejudice), without (i) the
disposition being adverse to the Indemnitee, (ii) an adjudication that the
Indemnitee was liable to the Corporation, (iii) a plea of guilty or nolo
contendere by the Indemnitee, (iv) an adjudication that the Indemnitee did
not act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and (v) with respect to any
criminal proceeding, an adjudication that the Indemnitee had reasonable cause
to believe his or her conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with
respect thereto.
4. Notification and Defense of Claim. As a condition precedent to his
or her right to be indemnified, the Indemnitee must notify the Corporation in
writing as soon as practicable of any action, suit, proceeding or
investigation involving him for which indemnity will or could
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be sought. With respect to any action, suit, proceeding or investigation of
who the Corporation is so notified, the Corporation will be entitled to
participate therein at its own expense and/or to assume the defense thereof
at its own expense, with legal counsel reasonably acceptable to the
Indemnitee. After notice from the Corporation to the Indemnitee of its
election so to assume such defense, the Corporation shall not be liable to
the Indemnitee for any legal or other expenses subsequently incurred by the
Indemnitee in connection with such claim, other than as video below in this
Section 4. The Indemnitee shall have the right to employ his or her own
counsel in connection with such claim, but the fees and expenses of such
counsel incurred after notice from the Corporation of its assumption of the
defense thereof shall be at the expense of the Indemnitee unless (i) the
employment of counsel by the Indemnitee has been authorized by the
Corporation, (ii) counsel to the Indemnitee, shall have reasonably concluded
that there may be a conflict of interest or position on any significant issue
between the Corporation and the Indemnitee in the conduct of the defense of
an action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and
expenses of counsel for the Indemnitee shall be at the expense of the
Corporation, except as otherwise expressly provided by this ARTICLE TWELFTH.
The Corporation shall not be entitled, without the consent of the Indemnitee,
to assume the defense of any claim brought by or in the right of the
Corporation or as to which counsel for the Indemnitee shall have reasonably
made the conclusion provided for in clause (ii) above.
5. Advance of Expenses. Subject to the provisions of Section 6 below,
in the event that the Corporation does not assume the defense pursuant to
Section 4 of this ARTICLE TWELFTH of any action, suit, proceeding or
investigation of which the Corporation receives notice under this ARTICLE
TWELFTH, any expenses (including attorneys' fees) incurred by an Indemnitee
in defending a civil or criminal action, suit, proceeding or investigation or
any appeal therefrom shall be paid by the Corporation in advance of the final
disposition of such matter, provided, however, that the payment of such
expenses incurred by an Indemnitee in advance of the final disposition of
such matter shall be made only upon receipt of an undertaking by or on behalf
of the Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that the Indemnitee is not entitled to be
indemnified by the Corporation as authorized in this ARTICLE TWELFTH. Such
undertaking may be accepted without reference to the financial ability of
such person to make such repayment.
6. Procedure for Indemnification. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this ARTICLE
TWELFTH, the Indemnitee shall submit to the Corporation a written request,
including in such request such documentation and information as is reasonably
available to the Indemnitee and is reasonably necessary to determine whether
and to what extent the Indemnitee is entitled to indemnification or
advancement of expenses. Any such indemnification or advancement of expenses
shall be made promptly, and in any event within 60 days after receipt by the
Corporation of the written request of the Indemnitee, unless with respect to
requests under Section 1, 2 or 5 the Corporation determines, by clear and
convincing evidence, within such 60-day period, that the Indemnitee did not
meet
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the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority
vote of a quorum of the directors of the Corporation consisting of persons
who are not at that time parties to the action, suit or proceeding in
question ("disinterested directors"), (b) if no such quorum is obtainable, a
majority vote of a committee of two or more disinterested directors, (c) a
majority vote of a quorum of the outstanding shares of stock of all classes
entitled to vote for directors voting as a single class, which quorum shall
consist of stockholders who are not at that time parties to the action, suit
or proceeding in question, (d) independent legal counsel (who may be regular
legal counsel to the Corporation) or (e) a court of competent jurisdiction.
7. Remedies. The right to indemnification or advances as granted by
this ARTICLE TWELFTH shall be enforceable by the Indemnitee in any court of
competent jurisdiction if the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within the 60-day period referred
to above in Section 6. Unless otherwise provided by law, the burden of
proving that the Indemnitee is not entitled to indemnification or advancement
of expenses under this ARTICLE TWELFTH shall be on the Corporation. Neither
the failure of the Corporation to have made a determination prior to the
commencement of such action that indemnification is proper in the
circumstances because the Indemnitee has met the applicable standard of
conduct, nor an actual determination by the Corporation pursuant to Section 6
that the Indemnitee has not met such applicable standard of conduct, shall be
a defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct. The Indemnitee's expenses (including
attorneys' fees) incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such proceeding
shall also be indemnified by the Corporation.
8. Subsequent Amendment. No amendment termination or repeal of this
ARTICLE TWELFTH or of the relevant provisions of the General Corporation Law
of the State of Delaware or any other applicable laws shall affect or
diminish in any way the rights of any Indemnitee to indemnification under the
provisions hereof with respect to an action, suit, proceeding or
investigation arising out of or relating to any actions, transactions or
facts occurring prior to the final adoption of such amendment, termination or
repeal.
9. Other Rights. The indemnification and advancement of expenses
provided by this ARTICLE TWELFTH shall not be deemed exclusive of any other
rights to which an Indemnitee seeking indemnification or advancement of
expenses may be entitled under any law (common or statutory), agreement or
vote of stockholders or disinterested directors or otherwise, both as to
action in his or her official capacity and as to action in any other capacity
while holding office for the Corporation, and shall continue as to an
Indemnitee who has ceased to be a director or officer, and shall inure to the
benefit of the estate, heirs, executors and administrators of the Indemnitee.
Nothing contained in this ARTICLE TWELFTH shall be deemed to prohibit, and
the Corporation is specific authorized to enter into, agreements with
officers and directors providing indemnification rights and procedures
different from those set forth in this ARTICLE
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TWELFTH. In addition, the Corporation may, to the extent authorized from
time to time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than,
those set forth in this ARTICLE TWELFTH.
10. Partial Indemnification. If an Indemnitee is entitled under any
provision of this ARTICLE TWELFTH to indemnification by the Corporation for
some or a portion of the expenses (including attorneys' fees), judgments,
fines or amounts paid in settlement actually and reasonably incurred by him
or her or on his or her behalf in connection with any action, suit,
proceeding or investigation and any appeal therefrom but not, however, for
the total amount thereof, the Corporation shall nevertheless indemnify the
Indemnitee for the portion of such expenses (including attorneys' fees),
judgments, fines, or amounts paid settlement to which the Indemnitee is
entitled.
11. Insurance. The Corporation may purchase and maintain insurance, at
its expense, to protect itself and any director, officer, employee or agent
of the Corporation or another corporation, partnership, joint venture, trust
or other enterprise (including any benefit plan) against any expense,
liability or loss incurred by him in any such capacity, or arising out of his
or her status as such, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
General Corporation Law of the State of Delaware.
12. Merger or Consolidation. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the
surviving corporation, the surviving corporation shall assume the obligations
of the Corporation under this ARTICLE TWELFTH with respect to any action,
suit, proceeding or investigation arising out of or relating to any actions,
transactions or facts occurring prior to the date of such merger or
consolidation.
13. Savings Clause. If this ARTICLE TWELFTH or any portion here shall
be invalidated on any ground by any Court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
in connection any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of
this ARTICLE TWELFTH that shall not have be invalidated and to the fullest
extent permitted by applicable law.
14. Definitions. Terms used herein and defined in Section 145(h)
Section 145(i) of the General Corporation Law of the State of Delaware shall
have respective meanings assigned to such terms in such Section 145(h) and
Section 145(i).
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15. Subsequent Legislation. If the General Corporation Law of the State
of Delaware is amended after adoption of this ARTICLE TWELFTH to expand
further the indemnification permitted to Indemnitees, then the Corporation
shall indemnify such persons to the fullest extent permitted by the General
Corporation of State of Delaware, as so amended.
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