Certificate of Incorporation - ACLARA BioSciences Inc.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ACLARA BIOSCIENCES, INC.
The undersigned, Joseph M. Limber, hereby certifies that:
1. He is the duly elected and acting President of ACLARA BioSciences,
Inc., a Delaware corporation.
2. This corporation was originally incorporated under the name "Soane
BioSciences, Inc.," and the Certificate of Incorporation of this corporation was
originally filed with the Secretary of State of Delaware on April 12, 1995 and
was amended on May 4, 1995, on November 30, 1995, on October 30, 1996, on April
15, 1997, on December 15, 1997, on March 24, 1998, on July 1, 1998, on January
11, 1999, on March 19, 1999, on April 28, 1999, on September 27, 1999, on
December 30, 1999 and on February 16, 2000.
3. This Amended and Restated Certificate of Incorporation has been duly
adopted by this corporation's Board of Directors and stockholders in accordance
with the applicable provisions of Section 242 and 245 of the General Corporation
Law of the State of Delaware, and the corporation's stockholders have given
their written consent in accordance with Section 228 of the General Corporation
Law of the State of Delaware.
4. The Certificate of Incorporation of this corporation shall be amended
and restated to read in full as follows:
ARTICLE I
The name of this corporation is ACLARA BioSciences, Inc. (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is 15 East North Street, Dover, County of Kent, Delaware 19901. The name of its
registered agent at such address is Incorporating Services, Ltd.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
This Corporation is authorized to issue two classes of shares to be
designated respectively Common Stock and Preferred Stock. The total number of
shares of Common Stock this
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Corporation shall have authority to issue is 150,000,000, par value $0.001 per
share, and the total number of shares of Preferred Stock this Corporation shall
have authority to issue is 34,200,000, par value $0.001 per share. The first
series of Preferred Stock shall consist of 3,516,699 shares designated Series B
Redeemable Preferred Stock (the "Series B Preferred Stock"); the second series
of Preferred Stock shall consist of 1,615,385 shares designated Series C
Redeemable Preferred Stock (the "Series C Preferred Stock"); the third series of
Preferred Stock shall consist of 627,691 shares designated Series D Redeemable
Preferred Stock (the "Series D Preferred Stock"); the fourth series of Preferred
Stock shall consist of 2,500,001 shares designated Series E Redeemable Preferred
Stock (the "Series E Preferred Stock"); the fifth series of Preferred Stock
shall consist of 10,833,332 shares designated Series F Redeemable Preferred
Stock (the "Series F Preferred Stock"); the sixth series of Preferred Stock
shall consist of 10,833,332 shares designated Series F-1 Redeemable Preferred
Stock (the "Series F-1 Preferred Stock"); the seventh series of Preferred Stock
shall consist of 1,119,403 shares designated Series G Redeemable Preferred Stock
(the "Series G Preferred Stock"); and the eighth series of Preferred Stock shall
consist of 1,275,000 shares designated Series H Redeemable Preferred Stock (the
"Series H Preferred Stock") and together with the Series B, Series C, Series D,
Series E, Series F, Series F-1 and Series G Preferred Stock, (the "Preferred
Stock").
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
Upon the effective date of the filing of this Amended and Restated
Certificate of Incorporation, every share of this Corporation's outstanding
Common Stock and Preferred Stock, par value $0.001 per share, shall be converted
and reconstituted into 1.5 shares of Common Stock and Preferred Stock, par value
$0.001 per share, respectively (the "Stock Split"). No fractional shares shall
be issued as a result of the Stock Split, and the numbers of shares of Common
Stock and Preferred Stock to be issued as a result of the Stock Split shall be
rounded up to the nearest whole share. All share amounts and amounts per share
set forth in this Amended and Restated Certificate of Incorporation have been
appropriately adjusted to reflect the Stock Split. No further adjustment of any
dividend preference, liquidation preference or conversion rate pursuant to
paragraphs 1, 2 or 4, respectively, of this Article IV shall be made as a result
of the Stock Split.
The relative powers, preferences and rights, and relative participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, granted to or imposed on the respective classes and series
of the shares of capital stock or the holders thereof are as follows:
1. DIVIDENDS.
1.1 Preferred Stock. The holders of the Series B, Series C, Series D,
Series E, Series F, Series F-1, Series G and Series H Preferred Stock shall be
entitled to receive, out of any funds legally available therefor, dividends in
an amount equal to $.032, $.069, $.09, $.144, $.144, $.144, $.215 and $.322 per
annum per share (each a "Preferential Dividend Amount"), respectively (subject
to equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event affecting such shares (hereinafter referred to as "Appropriately
Adjusted"), and no more, payable in preference
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and priority to any payment of any cash dividend on Common Stock or any other
shares of capital stock of the Corporation, when and as declared by the Board of
Directors of the Corporation during any fiscal year. Commencing on May 8, 1996,
dividends on the Series B Preferred Stock shall accrue, commencing on October
31, 1997, dividends on the Series C Preferred Stock shall accrue, commencing on
April 17, 1998, dividends on the Series D Preferred Stock shall accrue,
commencing on March 24, 1999, dividends on the Series E Preferred Stock shall
accrue, commencing on January 12, 1999, dividends on the Series F Preferred
Stock shall accrue, commencing on January 12, 1999, dividends on the Series F-1
Preferred Stock shall accrue, commencing on April 28, 2000, dividends on the
Series G Preferred Stock shall accrue, and commending on December 30, 2000,
dividends on the Series H Preferred Stock shall accrue, and such dividends shall
be deemed to accrue from day to day whether or not earned or declared and shall
be cumulative so that if at any time after such dates such dividends on the
Series B, Series C, Series D, Series E, Series F, Series F-1, Series G and
Series H Preferred Stock shall not all have been paid, or declared and set apart
for payment, the deficiency shall be fully paid on or declared and set apart for
payment in accordance with the terms of this Section 1.1 before any dividend
shall be paid on or declared or set apart for any other shares of capital stock
of the Corporation and before any purchase or acquisition of any other shares of
capital stock of the Corporation is made by the Corporation, except the
repurchase of the shares of capital stock of the Corporation from employees or
consultants of this Corporation upon termination of employment or consulting
services. Any accumulation of dividends on the Series B, Series C, Series D,
Series E, Series F Series F-1, Series G and Series H Preferred Stock shall not
bear interest.
1.2 Partial Payments. If the Board of Directors shall declare a
dividend on the outstanding shares of Series B, Series C, Series D, Series E,
Series F, Series F-1, Series G or Series H Preferred Stock (collectively, the
"Prior Dividend Preferred Stock"), and, in such case, the amount available for
payment thereof during any fiscal year is insufficient to permit the payment of
the full Preferential Dividend Amount required to be paid to the holders of the
outstanding shares of Prior Dividend Preferred Stock, then the amount available
for such dividend payment shall be distributed ratably among the holders of the
outstanding shares of Prior Dividend Preferred Stock in proportion to the
amounts that would be payable if the full amount of such Preferential Dividend
Amount was then paid. The Corporation shall not declare, pay or set aside for
payment any dividend or other distribution on any Common Stock or any other
stock of the Corporation ranking junior to the Prior Dividend Preferred Stock as
to dividend rights and rights on liquidation, dissolution and winding up in any
fiscal year unless the Prior Dividend Preferred Stock for such fiscal year and
prior years shall have been paid in full.
1.3 Participating Dividends after Preferential Payments. After the
holders of Prior Dividend Preferred Stock receive their Preferential Dividend
Amount for any fiscal year and prior years, the holders of the Prior Dividend
Preferred Stock shall participate ratably with the Common Stock in any other
dividends during such fiscal year, as if all such holders had converted their
Preferred Stock into the number of shares of Common Stock into which such
outstanding shares of Preferred Stock are convertible pursuant to Article IV
below, as of the record date of the dividend.
1.4 Common Stock. Subject to the preferences and other rights of the
Preferred Stock set forth in Section 1.1, 1.2 and 1.3, the holders of Common
Stock shall be entitled to receive dividends when, as and if declared by the
Board of Directors out of funds
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legally available therefor, on a basis in accordance with the number of shares
of Common Stock held by each such holder.
2. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution,
or winding up of the Corporation, either voluntary or involuntary, distributions
to the stockholders of the Corporation shall be made in the following manner:
(a) The holders of shares of Series F and Series F-1 Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, but before any
payment shall be made to the holders of Series B, Series C, Series D, Series E,
Series G or Series H Preferred Stock or Common Stock by reason of their
ownership thereof, an amount equal to $1.80 per share (Appropriately Adjusted),
plus all accrued but unpaid dividends on such Series F or Series F-1 Preferred
Stock (as applicable), and no more (the "Liquidation Preference Amount" for such
Series F and Series F-1 Preferred Stock). If upon any such liquidation,
dissolution or winding up of the Corporation, the remaining assets of the
Corporation available for distribution to its stockholders shall be insufficient
to pay the holders of shares of Series F and Series F-1 Preferred Stock the
Series F and Series F-1 Liquidation Preference Amount, respectively, the holders
of shares of Series F and Series F-1 Preferred Stock shall share ratably in any
distribution of the remaining assets and funds of the Corporation in proportion
to the product of the Liquidation Preference Amount multiplied by the number of
shares of Series F and Series F-1 Preferred Stock held by them.
(b) After payment has been made to the holders of the Series F and
Series F-1 Preferred Stock of the Series F and Series F-1 Liquidation Preference
Amount, the holders of shares of Series B, Series C, Series D, Series E, Series
G and Series H Preferred Stock then outstanding shall be entitled on a pari
passu basis to be paid out of the assets of the Corporation available for
distribution to its stockholders, but before any payment shall be made to the
holders of Common Stock by reason of their ownership thereof, an amount equal to
$.3981, $.8667, $1.083, $1.80, $2.68 and $4.0267 per share, respectively
(Appropriately Adjusted), plus all accrued but unpaid dividends on such shares,
and no more (the "Liquidation Preference Amount" for each such series). If upon
any such liquidation, dissolution or winding up of the Corporation, the
remaining assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of shares of Series B,
Series C, Series D, Series E, Series G and Series H Preferred Stock the full
amount to which they shall be entitled, the holders of shares of Series B,
Series C, Series D, Series E, Series G and Series H Preferred Stock shall share
ratably in any distribution of the remaining assets and funds of the Corporation
in proportion to the product of the appropriate Liquidation Preference Amount
multiplied by the number of shares of Series B, Series C, Series D, Series E,
Series G and Series H Preferred Stock held by them.
(c) After payment has been made to the holders of the Series B,
Series C, Series D, Series E, Series F, Series F-1, Series G and Series H
Preferred Stock of the full Liquidation Preference Amounts to which they shall
be entitled as aforesaid, the holders of the Series F and Series F-1 Preferred
Stock and Common Stock shall be entitled to share ratably in the remaining
assets of the Corporation available for distribution to its stockholders, based
on the number of shares of Common Stock held by them (or issuable upon
conversion of the Series F or Series F-1 Preferred Stock, as applicable) at the
time of such distribution.
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(d) The merger or consolidation of the Corporation into or with
another corporation (other than any merger or consolidation in which
stockholders of the Corporation immediately prior to such merger or
consolidation beneficially own a majority of the voting shares of the surviving
corporation immediately following such merger or consolidation), or the sale of
all or substantially all the assets of the Corporation (a "Liquidation Event"),
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 2, unless either:
(i) the holders of at least 66 2/3% of the then outstanding
shares of Series F and Series F-1 Preferred Stock, voting together as a single
class, elect to have such events not deemed to be a liquidation, dissolution or
winding up of the Corporation by giving written notice thereof to the
Corporation at least 15 days before the effective date of such event; or
(ii) the aggregate consideration that would be received by the
holders of the then outstanding shares of Common Stock and Series B, Series C,
Series D, Series E, Series F, Series F-1, Series G and Series H Preferred Stock
pursuant to such merger, consolidation or sale of assets, assuming the
conversion of all outstanding shares of Preferred Stock into Common Stock, would
be equal to at least $5.40 per share (Appropriately Adjusted) solely in cash
and/or marketable securities.
If notice is given pursuant to Subsection 2(d)(i) above, the provisions of
Subsection 4.1(i) below shall apply.
(e) Notice of Liquidation Event. The Corporation shall provide each
holder of Preferred Stock prior written notice of a Liquidation Event at least
30 days prior to the closing of such Liquidation Event.
3. VOTING RIGHTS.
(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 4 hereof), 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 or otherwise provided in this Article IV, holders of Series
B, Series C, Series D, Series E, Series F, Series F-1, Series G and Series H
Preferred Stock shall vote together with the holders of Common Stock as a single
class. Each holder of outstanding shares of Common Stock shall be entitled to
one vote for each share held at all meetings of stockholders of the Corporation
(and written actions in lieu of meetings). There shall be no cumulative voting.
Fractional votes by the holders of Preferred Stock shall not, however, be
permitted, and any fractional voting rights shall (after aggregating all shares
into which shares of Preferred Stock held by each holder could be converted) be
rounded to the nearest whole number.
(b) The Board of Directors of the Corporation shall consist of seven
members to be elected as follows:
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(i) One member of the Board of Directors of the Corporation
shall be elected by the holders of record of the Series B Preferred Stock,
voting separately as a class.
(ii) One member of the Board of Directors shall be either the
President or the Chief Executive Officer of the Corporation.
(iii) Two members of the Board of Directors of the Corporation
shall be elected by the holders of record of the Series F and Series F-1
Preferred Stock, voting together as a separate class (each a "Series F
Designee").
(iv) Three members of the Board of Directors of the Corporation
shall be elected by the holders of record of a majority of the outstanding
shares of Common Stock and Series B, Series C, Series D, Series E, Series F,
Series F-1, Series G and Series H Preferred Stock, voting together as a single
class on an as-converted basis; provided, however, that such member shall also
be approved by the holders of record of a majority of the outstanding Series F
and Series F-1 Preferred Stock, voting together as a single class.
At any meeting held for the purpose of electing directors, the presence in
person or by proxy of the holders of the majority of the shares of each of the
Series B Preferred Stock and Series F and Series F-1 Preferred Stock then
outstanding shall constitute a quorum of the Series B Preferred Stock and Series
F and Series F-1 Preferred Stock, respectively, for the purpose of electing
directors by holders of such series of Preferred Stock. A vacancy in any
directorship elected by the holders of the Series B Preferred Stock or Series F
and Series F-1 Preferred Stock shall be filled only by vote or written consent
in lieu of a meeting of the holders of the series of Preferred Stock which
elected such director. A director elected by the holders of the Series B
Preferred Stock or Series F and Series F-1 Preferred Stock shall be removed only
by vote or written consent in lieu of a meeting of the holders of the series of
Preferred Stock which elected such director.
(c) The Corporation shall not amend, alter or repeal the preferences,
special rights or other powers of a series of Preferred Stock so as to affect
adversely such series of Preferred Stock without the written consent or
affirmative vote of the holders of a majority of the then outstanding shares of
such series of Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization or
issuance of any series of Preferred Stock with preference or priority over an
existing series of Preferred Stock as to the right to receive either dividends
or amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely such series of Preferred Stock,
and the authorization or issuance of any series of Preferred Stock on a parity
with an existing series of Preferred Stock as to the right to receive either
dividends or amounts distributable upon liquidation, dissolution or winding up
of the Corporation shall not be deemed to affect adversely such series of
Preferred Stock.
4. CONVERSION.
4.1 Optional Conversion. The holders of the Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
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(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing Original Issue Price for such series of Preferred
Stock (as defined below) by the Conversion Price (as defined below) for such
series of Preferred Stock in effect at the time of conversion. The Original
Issue Price for the Series B Preferred Stock is $.3981, the Original Issue Price
for the Series C Preferred Stock is $.8667, the Original Issue Price for the
Series D Preferred Stock is $1.083, the Original Issue Price for the Series E
Preferred Stock is $1.80, the Original Issue Price for the Series F Preferred
Stock is $1.80, the Original Issue Price for the Series F-1 Preferred Stock is
$1.80, the Original Issue Price for the Series G Preferred Stock is $2.68 and
the Original Issue Price for the Series H Preferred Stock is $4.027. 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 (the "Conversion Price") shall initially be $.3981 for the
Series B Preferred Stock, $.8667 for the Series C Preferred Stock, $1.083 for
the Series D Preferred Stock, $1.80 for the Series E Preferred Stock, $1.80 for
the Series F Preferred Stock, $2.68 for the Series G Preferred Stock and $4.027
for the Series H Preferred Stock; provided, however, that the initial Conversion
Price of the Series H Preferred Stock shall be subject to adjustment in
accordance with Section 4.1(p). The initial Conversion Price for the Series F-1
Preferred Stock shall be determined in accordance with Section 4.1(o). Such
initial Conversion Prices, and the rate at which shares of Preferred Stock may
be converted into shares of Common Stock, shall be subject to adjustment as
provided below.
In the event of a notice of redemption of any shares of Series B, Series C,
Series D, Series E, Series F, Series F-1, Series G or Series H Preferred Stock
pursuant to Section 5 hereof, the Conversion Rights of the shares designated for
redemption shall terminate at the close of business on the fifth full day
preceding the date fixed for redemption, unless the redemption price is not paid
when due, in which case the Conversion Rights for such shares shall continue
until such price is paid in full. In the event of a Liquidation Event, the
Conversion Rights shall terminate at the close of business on the first full day
preceding the date fixed for the payment of any amounts distributable on the
occurrence of a Liquidation Event to the holders of Series B, Series C, Series
D, Series E, Series F, Series F-1, Series G or Series H Preferred Stock, unless
such distributions are not paid on the date fixed for such payment. The
Corporation shall give the holders of Preferred Stock 30 days' prior notice of
the date fixed for such payment and the amount of such distribution.
(b) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled upon
conversion of Preferred Stock into Common Stock, the corporation shall (after
aggregating all shares into which shares of Preferred Stock held by each holder
could be converted) pay cash equal to such fraction multiplied by the then fair
market value of one share of Common Stock.
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(c) Mechanics of Conversion.
(i) Before any holder of Preferred Stock shall be entitled
to convert shares of Preferred Stock into shares of Common Stock and to receive
certificates therefor, 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 the
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.
The certificate or certificates for the shares of Preferred Stock 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 notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date (or such later date as the transfer agent receives such
certificates or reasonable indemnification if such certificates have been lost,
stolen or destroyed), issue and deliver to such holder of Preferred Stock, or to
his or its nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled, together with cash in lieu
of any fraction of a share, and all accrued but unpaid dividends.
(ii) The Corporation shall at all times when the Preferred
Stock is 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 Preferred
Stock. Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock issuable
upon conversion of the Preferred 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 at such adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any accrued and unpaid dividends on the
Preferred Stock surrendered for conversion or on the Common Stock delivered upon
conversion, which dividends shall be paid in accordance with clause (iv) below.
(iv) 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 accrued and
unpaid dividends thereon. Any shares of Preferred Stock so converted shall be
retired and canceled and shall not be reissued and the Corporation may from time
to time take such appropriate action as may be necessary to reduce the
authorized Preferred Stock accordingly.
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(d) Adjustment for Diluting Issues.
(i) Special Definitions. For purposes of this Subsection
4.1(d), the following definitions shall apply:
(A) Option shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, excluding options granted to employees, directors or consultants of
the Corporation pursuant to the Corporation's 1995 or 1997 Stock Option Plan, to
acquire up to a maximum of 5,014,004 shares of Common Stock (Appropriately
Adjusted), and excluding options or shares of Common Stock issued to employees,
directors or consultants of the Corporation pursuant to a plan or agreement
approved by the Board of Directors and each of the two Series F Designees, if
such Series F Designees have been appointed to the Board of Directors at such
time.
(B) Original Issue Date shall mean the date on which
the first share of Series H Preferred Stock was first issued.
(C) Convertible Securities shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(D) Additional Shares of Common Stock shall mean all
shares of Common Stock issued (or, pursuant to Subsection 4.1(d)(iii) below,
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable:
(I) upon conversion of shares of Preferred Stock
outstanding on the Original Issue Date:
(II) as a dividend or distribution on Preferred
Stock;
(III) by reason of a dividend or distribution
covered by Subsection 4.1(f) hereof, a stock split, or subdivision of shares of
Common Stock covered by Subsection 4.1(e) hereof, or by reason of a dividend,
stock split, subdivision or other distribution on shares of Common Stock
excluded from the definition of Additional Shares of Common Stock by the
foregoing clauses (I) and (II) or this clause (III); or
(IV) upon the exercise of options excluded from
the definition of "Option" in Subsection 4.1(d)(i)(A).
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which shares of a series of Preferred
Stock is convertible shall be made by adjustment in the applicable Conversion
Price thereof: (a) unless the consideration per share (determined pursuant to
Subsection 4.1(d)(v)) for an Additional Share of Common Stock issued or deemed
to be issued by the Corporation is less than the applicable Conversion Price for
such series of Preferred Stock in effect on the date of, and immediately prior
to, the issue of such Additional Shares, or (b) if prior to such issuance, the
Corporation receives written notice from the
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holders of at least 67% of the then outstanding shares of such series of
Preferred Stock agreeing that no such adjustment shall be made as the result of
the issuance of Additional Shares of Common Stock.
(iii) Issue of Options and Convertible Securities Deemed
Issue of Additional Shares of Common Stock.
If the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares of Common Stock (as set forth in the instrument relating thereto
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 4.1(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) Upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the applicable Conversion Price computed upon the
initial issue thereof and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed as if:
(1) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, and the
consideration received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon such conversion or
exchange, if any, and
(2) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options and the
consideration received by the Corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the Corporation for the issue of such Options, whether or not exercised, plus
the consideration deemed to have been received by the Corporation upon the issue
of the Convertible Securities with respect to which such Options were actually
exercised;
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(C) In the event of any change in the number of shares
of Common Stock issuable upon the exercise, conversion or exchange of any Option
or Convertible Security, including, but not limited to, a change resulting from
the antidilution provisions thereof, the Conversion Price then in effect shall
forth with be readjusted to such Conversion Price as would have obtained had the
adjustment which was made upon the issuance of such Option or Convertible
Security (prior to such change) been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common Stock upon
the exercise or conversion of any such Option or Convertible Security; and
(D) No readjustment pursuant to clause (B) and (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
date, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
In the event the Corporation shall issue, at any time or from time to time
after the Original Issue Date, Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Subsection
4.1(d)(iii), but excluding shares issued as a dividend or distribution as
provided in Subsection 4.1(f) or upon a stock split as provided in Subsection
4.1(e)), without consideration or for a consideration per share less than the
applicable Conversion Price for a series of Preferred Stock (other than the
Series F-1 Preferred Stock) in effect on the date of and immediately prior to
such issue, then and in such event, such Conversion Price shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by dividing (x) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issue multiplied by
the then effective Conversion Price for such series of Preferred Stock and (2)
the aggregate consideration, if any, deemed received by the Corporation upon
such issue by (y) the total number of shares of Common Stock deemed to be
outstanding immediately after such issue; provided that for the purpose of this
Subsection 4.1(d)(iv), all shares of Common Stock issuable upon conversion of
shares of Preferred Stock outstanding immediately prior to such issue shall be
deemed to be outstanding, and immediately after any Additional Shares of Common
Stock are deemed issued pursuant to Subsection 4.1(d)(iii), such Additional
Shares of Common Stock shall be deemed to be outstanding.
Notwithstanding the foregoing, the applicable Conversion Price shall not be
so reduced at such time if the amount of such reduction would be an amount less
than $.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $.01 or more.
(v) Determination of Consideration. For purposes of this
Subsection 4(d), the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
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(A) Cash and Property. Such consideration shall:
(I) insofar as it consists of cash, be computed
at the aggregate of cash received by the Corporation, excluding amounts paid or
payable for accrued interest or accrued dividends;
(II) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I) and (II) above,
as determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 4.1(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(I) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(II) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall, at any time or from time to time after the Original Issue
Date, effect a subdivision of the outstanding Common Stock, the Conversion Price
for each series of Preferred Stock then in effect immediately before that
subdivision shall be proportionately decreased. If the Corporation shall, at any
time or from time to time while there are any shares of Preferred Stock
outstanding, combine the outstanding shares of Common Stock, the Conversion
Price for each series of Preferred Stock then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend
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or other distribution payable in additional shares of Common Stock, then and in
each such event the Conversion Price for each series of Preferred Stock then in
effect shall be decreased as of the time of such issuance or, in the event such
a record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price for each series of Preferred Stock
then in effect by a fraction:
(i) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price shall be recomputed accordingly as of the close
of business on such record date and thereafter the Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event provision shall be made so that the holders of Preferred Stock
shall receive upon conversion thereof in addition to the number of shares of
Common Stock receivable thereupon, the amount of securities of the Corporation
that they would have received had the Preferred Stock been converted into Common
Stock on the date of such event and had thereafter, during the period from the
date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period giving application
to all adjustments called for during such period, under this Section 4 with
respect to the rights of the holders of the Preferred Stock.
(h) Adjustments for Reclassification, Exchange, or Substitution.
If the Common Stock issuable upon the conversion of the Preferred Stock shall be
changed into the same or a different number of shares of any class or classes of
stock, whether by capital reorganization, reclassification, or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a reorganization, merger, consolidation, or sale of assets provided
for below), then and in each such event the holder of each such share of
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stocks and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
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(i) Adjustment for Merger or Reorganization, etc. Subject to
Section 2 hereof, in case of any consolidation or merger of the Corporation with
or into another corporation or the sale of all or substantially all of the
assets of the Corporation to another corporation, each share of Preferred Stock
shall thereafter be convertible into the kind and amount of shares of stocks or
other securities or property to which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion of such Preferred Stock
would have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 4 with respects to the rights and interest thereafter of the holders of
the Preferred Stock, to the end that the provisions set forth in this Section 4
(including provisions with respect to changes in and other adjustments of the
Conversion Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the conversion of the Preferred Stock.
(j) No Impairment. The Corporation will not, by amendment of its
certificate of incorporation or bylaws or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price for a series of Preferred
Stock pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of such series of Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon the
written request at any time of any holder of Preferred Stock, furnish or cause
to be furnished to such holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Conversion Price then in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which then would be received upon the conversion of Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation splits, subdivides or combines
its outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a stock split, subdivision or combination of its
outstanding shares of Common Stock or a stock dividend or stock distribution
thereon), or of any consolidation or merger of the Corporation into or with
another corporation, or of the sale of all or substantially all of the assets of
the Corporation; or
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(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Preferred Stock, and shall cause to be
mailed to the holders of the Preferred Stock at their last addresses as shown on
the records of the Corporation or such transfer agent, at least ten days prior
to the record date specified in (A) below or thirty days before the date
specified in (B) below, a notice stating
(A) the record date of such dividend, distribution,
stock split, subdivision or combination, or, if a record is not to be taken, the
date as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, stock split, subdivision or combination are to be
determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding up.
(m) Taxes. The Corporation will pay all taxes and other
governmental charges that may be imposed in respect of the issue or delivery of
shares of Common Stock upon conversion of the Preferred Stock by the record
holder thereof.
(n) Other Dilutive Events. If any other transaction or event
shall occur (excluding any transaction or event expressly referred to in this
Section 4.1) as to which the other provisions of this Section 4.1 are not
strictly applicable but the failure to make any adjustment to the applicable
Conversion Price or to any of the other terms of any series of Preferred Stock
would not fairly protect the conversion rights and other rights of the holders
of such series of Preferred Stock in accordance with the essential intent and
principles hereof, then, and as a condition to consummation of any such
transaction or event, and in each such case, the Corporation shall appoint a
firm of independent certified public accountants of recognized national standing
(which may be the regular auditors of the Corporation), which firm shall give
its opinion as to the adjustment, if any, on a basis consistent with the
essential intent and principles established in this Section 4.1, necessary to
preserve, without dilution, the conversion rights and other rights of the
holders of such series of Preferred Stock. The certificate of any such firm of
accountants shall be conclusive evidence of the correctness of any computation
made under this Section 4.1(n). The Corporation shall pay the fees and expenses
of such firm of accountants in connection with any such opinion. Upon receipt of
such opinion, the Corporation shall promptly deliver a copy thereof to each
holder of Preferred Stock and, unless the holders of at least 67% of the then
outstanding shares of such series of Preferred Stock agree otherwise, such
adjustment shall be thereupon effective.
(o) Conversion Price of Series F-1 Preferred Stock. From and
after such time as any shares of Series F-1 Preferred Stock are issued and
outstanding, the Conversion Price for the Series F-1 Preferred Stock shall be
the Conversion Price for the Series F Preferred Stock in
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effect immediately prior to such issuance and shall not thereafter be subject to
adjustment pursuant to Section 4.1(d) above.
(p) Special Adjustment to Initial Conversion Price of Series H
Preferred Stock. The initial Conversion Price for the Series H Preferred Stock
set forth in Section 4.1(a) hereof shall be subject to adjustment as follows:
(A) if the Corporation fails to file with the Securities and Exchange Commission
within 180 days of the date of the Original Issue Date of the Series H Preferred
Stock a registration statement covering shares of the Corporation's Common Stock
to be issued in a Qualifying IPO or (B) if the Corporation completes such
initial public offering at a price to the public of less than $4.027 per share,
then the initial Conversion Price of the Series H Preferred Stock shall be $3.22
per share.
4.2 Mandatory Conversion
(a) Each share of Preferred Stock shall be converted
automatically into shares of Common Stock, at the then applicable Conversion
Price for such series of Preferred Stock upon the occurrence of either of the
following:
(i) immediately prior to the closing of an underwritten
public offering of Common Stock of the Corporation pursuant to a registration
statement filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock to the
public at a price of at least $5.94 per share (Appropriately Adjusted),
resulting in the receipt by the Corporation of gross proceeds from such sale of
not less than $15,000,000 (a "Qualifying IPO"), provided that all declared and
unpaid dividends have been paid; provided, however, that the holders of at least
51% of the outstanding shares of Series F and Series F-1 Preferred Stock, voting
together as a single class, may elect to waive or amend the foregoing
requirements with respect to the minimum offering price per share and aggregate
gross proceeds, or
(ii) immediately prior to the closing of a merger or
consolidation of the Corporation into or with another corporation (other than
any merger or consolidation in which stockholders of the Corporation immediately
prior to such merger or consolidation beneficially own a majority of the voting
shares of the surviving corporation immediately following such merger or
consolidation), or the sale of all or substantially all the assets of the
Corporation, in which the aggregate consideration that would be received by the
holders of the then outstanding shares of Common Stock and Series B, Series C,
Series D, Series E, Series F, Series F-1, Series G and Series H Preferred Stock
pursuant to such merger, consolidation or sale of assets, assuming the
conversion of all outstanding shares of Preferred Stock into Common Stock, would
be equal to at least $5.40 per share (Appropriately Adjusted) in cash and/or
marketable securities (a "Qualifying Reorganization").
(b) All holders of record of shares of Preferred Stock will be
given written notice prior to the closing of a Qualifying IPO or Qualifying
Reorganization that is expected to result in mandatory conversion of all of such
shares of Preferred Stock pursuant to this Section 4. 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 appearing on the stock register. In the
event of mandatory conversion of all of such shares of Preferred Stock pursuant
to this Section 4,
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conversion shall be deemed to have been effected immediately prior to the
closing of the Qualifying IPO or Qualifying Reorganization. As promptly as
practicable after the date of such mandatory conversion, 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, and
shall thereafter receive certificates for the number of shares of Common Stock
to which such holder is entitled pursuant to this Section 4. On the date of such
mandatory conversion, all rights with respect to the Preferred Stock so
converted 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. If so requested by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by written instrument or instruments
of transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or by his or its attorney duly authorized in writing. All
certificates evidencing shares of Preferred Stock which are required to be
surrendered for conversion in accordance with the provisions hereof shall, from
and after the date such certificates are so required to be surrendered, be
deemed to have been retired and canceled and the shares of Preferred Stock
represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. As soon as practicable after the date of
such mandatory conversion and the surrender of the certificate or certificates
for Preferred Stock, the Corporation shall cause to be issued and delivered to
such holder, or on his or its written order, a certificate or certificates for
the number of full shares of Common Stock issuable on such conversion in
accordance with the provisions hereof and cash as provided in Subsection 4(b) in
respect of any fraction of a share of Common Stock otherwise issuable upon such
conversion.
5. Redemption of Preferred Stock of Holder.
(a) Subject to the provisions of Section 5(b) below, on the 24th day
of March in each of years 2005 and 2006 (collectively, the "Redemption Dates"
and individually, a "Redemption Date"), each holder of Series B, Series C,
Series D, Series E, Series F, Series F-1, Series G and Series H Preferred Stock
shall have the right to require the Corporation to redeem up to 50% and 100% of
the shares of such Preferred Stock held by such holder on each of those dates,
respectively, or such lesser number of shares of such Preferred Stock as the
holder may determine. Any holder desiring to exercise the redemption right
granted herein (a "Requesting Holder") shall provide written notice to the
Corporation not less than 30 days before the applicable Redemption Date setting
forth the number of shares to be redeemed on such Redemption Date. Subject to
the provisions of Section 5(b) below, on the Redemption Date and upon a holder's
surrender, in accordance with this Section 5(a), of such holder's certificates
representing shares to be redeemed, the redemption price shall be paid by the
Corporation in cash in an amount equal to the Liquidation Preference Amount for
each of the Series B, Series C, Series D, Series E, Series F, Series F-1, Series
G and Series H Preferred Stock on the applicable Redemption Date (Appropriately
Adjusted), payable in accordance with Section 1 hereof on each share of
Preferred Stock to be redeemed (the "Redemption Price").
(b) Within five days following its receipt from a Requesting Holder
of a notice of intent to exercises redemption rights pursuant to Subsection (a)
hereof, the Corporation shall provide each holder of Preferred Stock, other than
the Requesting Holder, with a written notice (addressed to the holder at its
address as it appears on the stock transfer books of the Corporation)
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containing an offer to redeem shares of Preferred Stock as provided above, which
notice shall specify the applicable Redemption Price. Each holder of Preferred
Stock, other than the Requesting Holder, will have until 30 days prior to the
Redemption Date to provide the Corporation with written notice of such holder's
acceptance of the redemption offer, which notice shall specify the number of
shares to be redeemed. All notices or offers hereunder shall be sent by first
class or registered mail, postage prepaid, and shall be deemed to have been
provided when mailed.
(c) In the event that any holder of Preferred Stock, other than the
Requesting Holder, does not provide the Corporation with written notice of the
holder's acceptance of the redemption offer on or before the date 30 days prior
to the applicable Redemption Date, the Corporation shall have no obligation to
redeem any shares of Preferred Stock of such holder on the Redemption Date
specified in its notice to such holder.
(d) If, with respect to any Redemption Date, a holder of Preferred
Stock does not request, pursuant to Subsection (a) or Subsection (b) hereof, the
redemption of all of the shares of Preferred Stock which such holder may request
to be redeemed as provided above, such holder may request that such shares of
Preferred Stock be redeemed on any subsequent Redemption Date in addition to the
shares of Preferred Stock for which the holder would otherwise be permitted to
request the redemption by the Corporation; provided, that, no holder may require
the Corporation to redeem any shares of Preferred Stock after March 24, 2006.
(e) Notwithstanding the foregoing, the Corporation's obligation to
redeem shares of a series of Preferred Stock on the Redemption Date shall be
waived if the holders of at least 51% of the then outstanding shares of such
series of Preferred Stock shall request such waiver by written notice given to
the Corporation at least ten days prior to such Redemption Date. The Corporation
shall immediately notify all holders of such series of Preferred Stock of any
such waiver and shall not be required to redeem the shares of such series of
Preferred Stock on such Redemption Date. Any waiver with respect to the
Corporation's obligation to redeem shares of a series of Preferred Stock
pursuant to this subsection shall not affect the Corporation's obligation to
redeem shares of any other series of Preferred Stock pursuant to this Section 5.
(f) On or prior to the Redemption Date, unless waived pursuant to
Subsection (e) above, the Requesting Holder and each other holder of Preferred
Stock accepting the Corporation's redemption offer shall surrender his or its
certificate or certificates representing the shares to be redeemed, in the
manner and at the place designated in the Corporation's redemption offer. If
less than all shares represented by such certificate or certificates are
redeemed, the Corporation shall issue a new certificate for the unredeemed
shares. From and after the Redemption Date, unless there shall be a default in
payment of the Redemption Price, all rights of each holder with respect to
shares of Preferred Stock redeemed on the Redemption Date shall cease (except
the right to receive the Redemption Price without interest upon surrender of the
certificate or certificates therefor), and such shares shall not be deemed to be
outstanding for any purpose whatsoever. Such shares of Preferred Stock shall not
be reissued, and the Corporation may from time to time take such appropriate
action as may be necessary to reduce the authorized Preferred Stock accordingly.
Nothing herein shall prevent or restrict the purchase by the Corporation, from
time to time, of the whole or any part of the Preferred Stock at such price or
prices as the Corporation may determine subject to the provisions of applicable
law.
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(g) For the purpose of determining whether funds are legally
available for redemption of shares of Preferred Stock as provided herein, the
Corporation shall value its assets as the highest amount permissible under
applicable law. Notwithstanding any other provision of this Section 5, if, on
the Redemption Date, funds of the Corporation legally available therefor shall
be insufficient to redeem all the shares of Preferred Stock required to be
redeemed as provided herein, funds to the extent legally available shall be used
for such purpose and the Corporation shall effect such redemption ratably
according to the number of shares of Preferred Stock held by each holder
accepting the Corporation's redemption offer, the number of shares held by the
Requesting Holder and their respective Redemption Prices. The redemption
requirements provided hereby shall be continuous, so that if on the Redemption
Date such requirements shall not be fully discharged, without further action by
any holder of Preferred Stock, funds legally available shall be applied therefor
until such requirements are fully discharged.
6. PROTECTIVE PROVISIONS.
(a) Except as set forth herein, so long as an aggregate of at least
750,000 shares of Series F and Series F-1 Preferred Stock remain outstanding,
the Corporation will not, without the prior written consent of the holders of at
least 67% of the total number of outstanding shares of Series F and Series F-1
Preferred Stock (voting together as a single class), take any action which:
(i) alters, changes, or amends the rights, preferences or
privileges of any series of Preferred Stock (other than the requirements for a
Qualifying IPO, which may be waived or amended with the consent of holders of at
least 51% of the then outstanding shares of Series F and Series F-1 Preferred
Stock, voting together as a single class);
(ii) increases the authorized number of shares of Series F or
Series F-1 Preferred Stock or the Preferred Stock;
(iii) creates any new class or series of shares having any right,
preference or privilege over or on a parity with the Series F or Series F-1
Preferred Stock;
(iv) involves a Liquidation Event (other than a Qualifying
Reorganization);
(v) involves any transaction which would result in a dividend
or other distribution upon any of the Corporation's equity securities;
(vi) causes the Corporation to repurchase or otherwise acquire
shares other than pursuant to (A) its 1995 or 1997 Stock Option Plan or other
restricted stock purchase agreements approved by the Board of Directors at the
original issue price, or (B) redemption of Preferred Stock pursuant to this
Certificate of Incorporation; or
(vii) increases or decreases the authorized number of directors
constituting the Corporation's board of directors.
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7. AMENDMENTS AND WAIVERS.
Any action, approval, request, consent, notice or waiver which is
required or permitted under this Article IV with respect to a series of
Preferred Stock shall become effective and binding upon all holders of such
series of Preferred Stock if the same is approved by the vote or written consent
of the holders of at least sixty-seven percent (67%) of such series of Preferred
Stock then issued and outstanding.
8. Special Mandatory Conversion.
(a) At any time following the Original Issue Date, if:
(i) any holder of shares of Series F Preferred Stock is
entitled to exercise the right of first offer (the "Right of First Offer") as
set forth in Section 1(k) of that certain Amended and Restated Investors' Rights
Agreement among the Corporation and the certain holders of its Preferred Stock
and other equity securities, as such agreement may from time to time be amended
(the "Agreement") with respect to an equity financing of the Corporation at a
price per share which is less than the Conversion Price then in effect for the
Series F Preferred Stock (an "Equity Financing"),
(ii) the Corporation has complied with its obligations under the
Agreement with respect to the Right of First Offer, and
(iii) such holder does not by exercise of such holder's Right of
First Offer acquire the amount of securities offered in such Equity Financing to
which such holder is entitled pursuant to Section 1(k) of the Agreement,
then all of such holder's shares of Series F Preferred Stock shall automatically
and without further action on the part of such holder be converted into an
equivalent number of shares of Series F-1 Preferred Stock effective immediately
prior to the closing of such Equity Financing; provided, however, that no such
conversion shall occur in connection with a particular Equity Financing if,
pursuant to the written request of the Corporation, the Right of First Offer
with respect to such Equity Financing is waived by the holders of the Series F
Preferred Stock in accordance with the terms of the Agreement; and provided,
further, that no such conversion shall occur in connection with a particular
Equity Financing with respect to a particular holder of Series F Preferred Stock
if, pursuant to the written request of the Corporation, (i) such holder agrees
in writing to waive such holder's Right of First Offer with respect to such
Equity Financing and (ii) each other holder of shares of Series F Preferred
Stock agrees in writing that such particular holder of shares of Series F
Preferred Stock may waive such particular holder's Right of First Offer with
respect to such Equity Financing. Upon conversion pursuant to this Section 8,
the shares of Series F Preferred Stock so converted shall be canceled and not
subject to reissuance.
(b) The holder of any shares of Series F Preferred Stock converted
pursuant to this Section 8 shall deliver to the Corporation during regular
business hours at the office of any transfer agent of the Corporation for such
Preferred Stock, or at such other place as may be designated by the Corporation,
the certificate or certificates representing the shares so converted, duly
endorsed or assigned in blank or to the Corporation. As promptly thereafter as
is practicable,
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the Corporation shall issue and deliver to such holder, at the place designated
by such holder, a certificate or certificates for the number of full shares of
the Series F-1 Preferred Stock to which such holder is entitled. The person in
whose name the certificate for such shares of Series F-1 Preferred Stock is to
be issued shall be deemed to have become a stockholder on the effective date of
the conversion of the Series F Preferred Stock, unless the transfer books of the
Corporation are closed on that date, in which case such person shall be deemed
to have become a stockholder of record on the next succeeding date on which the
transfer books are open.
(c) In the event that any shares of Series F-1 Preferred Stock are
issued, concurrently with such issuance, the Corporation shall use its best
efforts to take all such action as may be required, including amending its
Certificate of Incorporation, (i) to cancel all authorized shares of Series F-1
Preferred Stock that remain unissued after such issuance, (ii) to create and
reserve for issuance a new series of Preferred Stock equal in number to the
number of Shares of Series F-1 Preferred Stock so canceled and designated
"Series F-2 Preferred Stock," with the designations, powers, preferences and
rights and the qualifications, limitations and restrictions identical to those
then applicable to the Series F Preferred Stock, except that the conversion
price for such shares of Series F-2 Preferred Stock once initially issued shall
be the Conversion Price in effect immediately prior to such issuance and shall
not after such issuance be subject to adjustment under Section 4.1(d)(iv)
hereof, and (iii) to amend the provisions of this Section 8 to provide that any
subsequent special mandatory conversion pursuant hereto will be into shares of
Series F-2 Preferred Stock rather than Series F-1 Preferred Stock. The
corporation shall take the same actions with respect to the Series F-2 Preferred
Stock and each series of Preferred Stock subsequently authorized pursuant to
this Section 8 upon initial issuance of shares of the last such series to be so
authorized.
9. AUTHORIZED PREFERRED STOCK FOLLOWING INITIAL PUBLIC OFFERING
(a) Notwithstanding the foregoing Sections 1 through 8 of this
Article IV, upon the closing of the Corporation's initial public offering of its
Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
to the public (the "Initial Public Offering") this Corporation will be
authorized to issue 15,000,000 shares of Preferred Stock, par value $0.001 per
share, which may be issued from time to time in one or more series. Following
the closing of the Initial Public Offering, the Board of Directors will be
authorized, by filing a certificate (a "Preferred Stock Designation") pursuant
to the Delaware General Corporation Law, to fix or alter from time to time the
designation, powers, preferences and rights (voting or otherwise) granted upon,
and the qualifications, limitations or restrictions of, any wholly unissued
series of Preferred Stock, and to establish from time to time the number of
shares constituting any such series or any of them; and to increase or decrease
the number of shares of any series subsequent to the issuance of shares of that
series, but not below the number of shares of such series then outstanding. In
case the number of shares of any series shall be decreased in accordance with
the foregoing sentence, the shares constituting such decrease shall resume the
status that they had prior to the adoption of the resolution originally fixing
the number of shares of such series.
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ARTICLE V
In furtherance and not in limitation of the powers conferred by statute,
subject to any restrictions set forth herein, the Board of Directors of the
Corporation is expressly authorized to make, alter or repeal Bylaws of the
Corporation.
ARTICLE VI
Notwithstanding Section 3 of Article IV hereof, effective upon the closing
of the corporation's Initial Public Offering, the Board of Directors shall have
that number of directors set out in the Bylaws of the Corporation as adopted or
as set from time to time by a duly adopted amendment thereto by the Directors or
stockholders of the Corporation. The Board of Directors shall be divided into
three classes, as nearly equal in number as possible. The initial classification
of directors shall be determined in accordance with a resolution or resolutions
adopted by the Board of Directors. The term of office of the first class to
expire at the first annual meeting of stockholders or any special meeting in
lieu thereof following the Initial Public Offering, the term of office of the
second class to expire at the second annual meeting of stockholders or any
special meeting in lieu thereof following the Initial Public Offering and the
term of office of the third class to expire at the third annual meeting of
stockholders or any special meeting in lieu thereof following the Initial Public
Offering. At each annual meeting of stockholders or special meeting in lieu
thereof following such initial classification, directors elected to succeed
those directors whose terms expire shall be elected for a term of office to
expire at the third succeeding annual meeting of the stockholders or special
meeting in lieu thereof after their election and until their successors are duly
elected and qualified. The foregoing provisions shall become effective only when
the Corporation becomes a listed corporation within the meaning of Section 301.5
of the California Corporations Code. Directors need not be stockholders unless
so required by the certificate of incorporation or these bylaws, wherein other
qualifications for directors may be prescribed.
Subject to the rights of the holders of any series of Preferred Stock then
outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal from
office or other cause may be filled only by a majority vote of the directors
then in office even though less than a quorum, or by a sole remaining director,
and not by the stockholders. In the event of any increase or decrease in the
authorized number of directors, (a) each director then serving as such shall
nevertheless continue as a director of the class of which he or she is a member
until the expiration of his or her current term or his or her prior death,
retirement, removal or resignation and (b) the newly created or eliminated
directorships resulting from such increase or decrease shall if reasonably
possible be apportioned by the board of directors among the three classes of
directors so as to ensure that no one class has more than one director more than
any other class. To the extent reasonably possible, consistent with the
foregoing rule, any newly created directorships shall be added to those classes
whose terms of office are to expire at the latest dates following such
allocation and newly eliminated directorships shall be subtracted from those
classes whose terms of office are to expire at the earliest dates following such
allocation, unless otherwise provided for from time to time by resolution
adopted by a majority of the directors then in office, although less than a
quorum. In the event of a vacancy in the board of directors, the remaining
directors, except as otherwise
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provided by law, may exercise the powers of the full Board of Directors until
the vacancy is filled. Notwithstanding the foregoing, each director shall serve
until his or her successor is duly elected and qualified or until his or her
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
No person entitled to vote at an election for directors may cumulate votes
to which such person is entitled, unless, at the time of such election, the
Corporation is subject to Section 2115(b) of the CGCL and is not a "listed"
corporation or ceases to be a "listed" corporation under Section 301.5 of the
CGCL. During this time, every stockholder entitled to vote at an election for
directors may cumulate such stockholder's vote and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which such stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder thinks fit. No stockholder, shall be entitled to
so cumulate such stockholder's votes unless (i) the names of such candidate or
candidates have been placed in nomination prior to the voting and (ii) the
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any stockholder
has given proper notice to cumulate votes, all stockholders may cumulate their
votes for any candidates who have been properly placed in nomination. Under
cumulative voting, the candidates receiving the highest number of votes, up to
the number of directors to be elected, are elected.
This Article VI shall become effective only when the Corporation is a
"listed" corporation within the meaning of Section 301.5 of the California
Corporations Code.
ARTICLE VII
Elections of directors need not be by written ballot unless a stockholder
demands election by written ballot at the meeting and before voting begins or
unless otherwise provided in the Bylaws of the Corporation.
ARTICLE VIII
Following the closing of the Initial Public Offering, no action shall be
taken by the stockholders except at an annual or special meeting of
stockholders. The stockholders may not take action by written consent.
ARTICLE IX
A. To the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
B. The Corporation may indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor of the Corporation, or serves
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or served at any other enterprise as a director, officer or employee at the
request of the Corporation or any predecessor to the Corporation.
C. Neither any amendment nor repeal of this Article VII, nor the adoption
of any provision of this Corporation's Certificate of Incorporation inconsistent
with this Article VII, shall eliminate or reduce the effect of this Article VII
in respect of any matter occurring, or any action or proceeding accruing or
arising or that, but for this Article VII, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE VIII
The Corporation is to have perpetual existence.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any statutory provision) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors in
the Bylaws of the Corporation."
* * *
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The foregoing Amended and Restated Certificate of Incorporation has been
duly adopted by this corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Section 228, 242 and 245 of the
General Corporation Law of the State of Delaware.
Executed at Mountain View, California on February __, 2000.
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Joseph M. Limber
President
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Wendy R. Hitchcock
Secretary
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