Certificate of Incorporation - Netezza Corp.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NETEZZA CORPORATION
(originally incorporated on August 18, 2000 under the name Intelligent Data
Engines, Inc.)
FIRST: The name of the Corporation is Netezza Corporation.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: That, effective at 5:00 p.m., eastern time, on the filing date of
this Certificate of Amendment of Certificate of Incorporation (the "Effective
Time"), a one-for-two reverse stock split of the Corporation's common stock
shall become effective, pursuant to which each two shares of common stock
outstanding and held of record by each stockholder of the Corporation (including
treasury shares) immediately prior to the Effective Time shall be reclassified
and combined into one share of common stock automatically and without any action
by the holder thereof upon the Effective Time and shall represent one share of
common stock from and after the Effective Time. No fractional shares of common
stock shall be issued as a result of such reclassification and combination. In
lieu of any fractional shares to which the stockholder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then fair market value of the common stock as determined by the Board of
Directors of the Corporation.
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is (i) 500,000,000 shares of Common Stock, $.001
par value per share ("Common Stock") and (ii) 82,911,225 shares of Preferred
Stock, $.001 par value per share ("Preferred Stock"), of which 17,280,000 shares
shall be designated as Series A Convertible Preferred Stock (the "Series A
Preferred Stock"), 29,425,622 shares shall be designated as Series B Convertible
Preferred Stock (the "Series B Preferred Stock"), 23,058,151 shares shall be
designated as Series C Convertible Preferred Stock (the "Series C Preferred
Stock") and 8,147,452 shares shall be designated as Series D Convertible
Preferred Stock (the "Series D Preferred Stock").
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The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
Except as otherwise provided in the Corporation's Certificate of Incorporation,
the number of authorized shares of Common Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the stock of the Corporation entitled to
vote, irrespective of the provisions of Section 242(b)(2) of the General
Corporation Law of the State of Delaware.
3. Dividends. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors, subject to any preferential rights of any then outstanding Preferred
Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by adopting a resolution or resolutions
providing for the issuance of the shares thereof and by filing a certificate of
designations relating thereto in accordance with the General Corporation Law of
the State of Delaware, to determine and fix the number of shares of such series
and such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, including
without limitation thereof, dividend rights, conversion rights, redemption
privileges and liquidation preferences, as shall be stated and expressed in such
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resolutions, all to the full extent now or hereafter permitted by the General
Corporation Law of the State of Delaware. Without limiting the generality of the
foregoing, the resolutions providing for issuance of any series of Preferred
Stock may provide that such series shall be superior or rank equally or be
junior to any other series of Preferred Stock to the extent permitted by law.
The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares then outstanding) by the
affirmative vote of the holders of a majority of the voting power of the capital
stock of the Corporation entitled to vote thereon, voting as a single class,
irrespective of the provisions of Section 242(b)(2) of the General Corporation
Law of the State of Delaware.
C. SERIES A, SERIES B, SERIES C AND SERIES D PREFERRED STOCK.
1. Dividends. The Corporation shall not declare, make or pay any dividends
(other than dividends payable in Common Stock) or distributions (as defined
below) on shares of Common Stock unless and until the holders of the Preferred
Stock then outstanding shall have first received, or simultaneously receive, a
like dividend or distribution on each outstanding share of Preferred Stock equal
to the product of (i) the per share dividend or distribution to be declared,
paid or set aside for the Common Stock, multiplied by (ii) the number of whole
shares of Common Stock into which such share of Preferred Stock is then
convertible.
For purposes of this Section 1 and Section 3, "distribution" shall mean the
transfer of cash or property without consideration, whether by way of dividend
or otherwise, payable other than in Common Stock or other securities of the
Corporation, or the purchase or redemption of shares of the Corporation (other
than repurchases of Common Stock held by employees or directors of, or
consultants to, the Corporation upon termination of their employment or services
pursuant to agreements approved by the Board of Directors providing for such
repurchase at a price equal to the original issue price of such shares or
pursuant to the exercise of first refusal rights on transfers) for cash or
property, including any such transfer, purchase or redemption by a subsidiary of
the Corporation.
2. Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations
and Asset Sales.
(a) Payment to Holders of Preferred Stock. In the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the holders of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, before any payment shall be
made, or any assets distributed, to the holders of Common Stock or any other
class or series of stock or securities ranking on liquidation junior to the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock (such Common Stock and other stock or securities being
collectively referred to as "Junior Stock") by reason of their ownership
thereof, an amount equal to (i) $.50 per share (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or other
similar recapitalization affecting such shares), plus any dividends declared but
unpaid on such shares, in the case of the Series A Preferred Stock, (ii) $.8634
per share (subject to appropriate adjustment in the event of any stock dividend,
stock
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split, combination or other similar recapitalization affecting such shares),
plus any dividends declared but unpaid on such shares, in the case of the Series
B Preferred Stock, (iii) $.86737 per share (subject to appropriate adjustment in
the event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), plus any dividends declared but unpaid
on such shares, in the case of the Series C Preferred Stock and (iv) $2.55 per
share (subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares), plus any dividends declared but unpaid on such shares, in the case of
the Series D Preferred Stock. 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 Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and any other class or
series of stock ranking on liquidation on a parity with the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock shall share ratably in any distribution of the assets and funds of the
Corporation in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(b) Payment of Remaining Assets. After the payment of all preferential
amounts required to be paid to the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock and any
other class or series of stock of the Corporation ranking on liquidation on a
parity with the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, upon the dissolution, liquidation
or winding up of the Corporation, the remaining assets and funds of the
Corporation available for distribution to its stockholders shall be distributed
among the holders of shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Common Stock and any
other class or series of stock entitled to participate in liquidation
distributions with the holders of Common Stock, pro rata based on the number of
shares of Common Stock held by each (assuming conversion into Common Stock of
all such shares at the then applicable conversion rate); provided, however, that
the aggregate amount which the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock may
receive under Subsections 2(a) and 2(b) shall not exceed $1.50 per share
(subject to appropriate adjustment in the event of a stock split, stock
dividend, combination, reclassification, or similar event affecting the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock) in the
case of the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock and $5.00 per share (subject to appropriate adjustment in the
event of a stock split, stock dividend, combination, reclassification, or
similar event affecting the Series D Preferred Stock) in the case of the Series
D Preferred Stock. Notwithstanding the foregoing, each holder of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock shall, in the event of any such liquidation, dissolution or
winding up of the Corporation, be entitled to receive the greater of (i) the
amount such holder would be entitled to receive under Subsections 2(a) and 2(b)
(after giving effect to the limitation in the proviso clause of the preceding
sentence) or (ii) such amount per share as would have been payable had each
share of each series of Preferred Stock that would receive a greater amount upon
conversion into Common Stock than pursuant to clause (i) above
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converted into Common Stock pursuant to Section 4 immediately prior to such
liquidation, dissolution or winding up (the greater of such amounts being
referred to as the "Series A Liquidation Amount", the "Series B Liquidation
Amount", the "Series C Liquidation Amount" and the "Series D Liquidation
Amount", respectively).
(c) Deemed Liquidation Events.
(i) The following events shall be deemed to be a liquidation of
the Corporation for purposes of this Section 2 (a "Deemed Liquidation Event"):
(A) a merger or consolidation in which
(I) the Corporation is a constituent party or
(II) a subsidiary of the Corporation is a constituent
party and the Corporation issues shares of its
capital stock pursuant to such merger or
consolidation,
except in either case any such merger or consolidation involving the Corporation
or a subsidiary in which the holders of capital stock of the Corporation
immediately prior to such merger or consolidation continue to hold immediately
following such merger or consolidation at least 60% by voting power of the
capital stock of (A) the surviving or resulting corporation or (B) if the
surviving or resulting corporation is a wholly owned subsidiary of another
corporation immediately following such merger or consolidation, the parent
corporation of such surviving or resulting corporation;
(B) the sale of all or substantially all the assets of the
Corporation (except where such sale is to a wholly owned subsidiary of the
Corporation); or
(C) the liquidation, dissolution or winding up of the
Corporation.
(ii) The Corporation shall not effect any transaction
constituting a Deemed Liquidation Event pursuant to Subsection 2(c)(i)(A) above
unless (A) the agreement or plan of merger or consolidation provides that the
consideration payable to the stockholders of the Corporation shall be allocated
among the holders of capital stock of the Corporation in accordance with
Subsections 2(a) and 2(b) above or (B) the holders of (I) 60% of the outstanding
shares of Series A Preferred Stock, (II) 66 2/3% of the outstanding shares of
Series B Preferred Stock, (III) 66 2/3% of the outstanding shares of Series C
Preferred Stock and (IV) a majority of the outstanding shares of Series D
Preferred Stock specifically consent in writing to the allocation of such
consideration in a manner different from that provided in Subsections 2(a) and
2(b) above.
(iii) In the event of a Deemed Liquidation Event pursuant to
Subsection 2(c)(i)(B) above, if the Corporation does not effect a dissolution of
the Corporation under the Delaware General Corporation Law within 60 days after
such Deemed Liquidation
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Event, then (A) the Corporation shall deliver a written notice to each holder of
Preferred Stock no later than the 60th day after the Deemed Liquidation Event
advising such holders of their right (and the requirements to be met to secure
such right) pursuant to the terms of the following clause (B) to require the
redemption of such shares of Preferred Stock, and (B) if the holders of shares
of Preferred Stock representing a majority of the votes represented by the then
outstanding shares of Preferred Stock (including a majority of the votes
represented by the outstanding shares of Series C Preferred Stock) so request in
a written instrument delivered to the Corporation not later than 75 days after
such Deemed Liquidation Event, the Corporation shall use the consideration
received by the Corporation for such Deemed Liquidation Event (net of any
liabilities associated with the assets sold or technology licensed, as
determined in good faith by the Board of Directors of the Corporation), to the
extent legally available therefor (the "Net Proceeds"), to redeem, on the 75th
day after such Deemed Liquidation Event (the "Liquidation Redemption Date"), all
outstanding shares of Preferred Stock at a price per share equal to the Series A
Liquidation Amount, the Series B Liquidation Amount, the Series C Liquidation
Amount or the Series D Liquidation Amount, as the case may be. If the Net
Proceeds are not sufficient to so redeem all outstanding shares of Preferred
Stock, the Corporation shall redeem a pro rata portion (based on the aggregate
amounts that would have been payable on redemption of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, respectively) of each holder's shares of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock out of
the Net Proceeds. The provisions of Subsections 6(b) through 6(e) below shall
apply, with such necessary changes in the details thereof as are necessitated by
the context, to the redemption of the Preferred Stock pursuant to this
Subsection 2(c)(iii). Prior to the distribution or redemption provided for in
this Subsection 2(c)(iii), the Corporation shall not expend or dissipate the
consideration received for such Deemed Liquidation Event, except to discharge
expenses incurred in the ordinary course of business.
(iv) The amount deemed paid or distributed to the holders of
capital stock of the Corporation upon any such Deemed Liquidation Event shall be
the cash or the value of the property, rights or securities paid or distributed
to such holders by the Corporation or the acquiring person, firm or other
entity. The value of such property, rights or securities shall be determined in
good faith by the Board of Directors of the Corporation.
3. Voting.
(a) On any matter presented to the stockholders of the Corporation for
their action or consideration at any meeting of stockholders of the Corporation
(or by written action of stockholders in lieu of meeting), 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 of the record date for
determining stockholders entitled to vote on such matter. Except as provided by
law, by the provisions of Subsections 3(b), 3(c), 3(d) or 3(e) below or by the
provisions establishing any other series of Preferred Stock, holders of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and any other outstanding series of Preferred Stock shall vote
together with the holders of Common Stock as a single class.
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(b) So long as at least 4,250,000 shares of Series A Preferred Stock
remain outstanding (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), the Corporation shall not, without the written consent or
affirmative vote of the holders of at least 60% of the then outstanding shares
of Series A Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, (i) authorize
or designate any shares of capital stock of the Corporation with preference or
priority over or on a parity with the Series A Preferred Stock (or increase the
rights of any existing class or series of capital stock so as to give such class
or series of capital stock preference or priority over or place it on a parity
with the Series A Preferred Stock) with respect to dividend rights, liquidation
preferences, redemption rights or anti-dilution protection, (ii) pay any
dividend or distribution on any shares of capital stock that ranks junior to the
Series A Preferred Stock with respect to the right to receive dividends or
liquidation payments or (iii) amend, alter, repeal or waive any preference,
special right or other power of the Series A Preferred Stock or any provision of
the Certificate of Incorporation or the Corporation's By-laws relative to the
Series A Preferred Stock, if such preference, right, power or provision
specifically affects, covers or references the Series A Preferred Stock.
(c) So long as at least 5,790,000 shares of Series B Preferred Stock
remain outstanding (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), the Corporation shall not, without the written consent or
affirmative vote of the holders of at least 66 2/3% 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) authorize
or designate any shares of capital stock of the Corporation with preference or
priority over or on a parity with the Series B Preferred Stock (or increase the
rights of any existing class or series of capital stock so as to give such class
or series of capital stock preference or priority over or place it on a parity
with the Series B Preferred Stock) with respect to dividend rights, liquidation
preferences, redemption rights or anti-dilution protection, (ii) pay any
dividend or distribution on any shares of capital stock that ranks junior to the
Series B Preferred Stock with respect to the right to receive dividends or
liquidation payments or (iii) amend, alter, repeal or waive any preference,
special right or other power of the Series B Preferred Stock or any provision of
the Certificate of Incorporation or the Corporation's By-laws relative to the
Series B Preferred Stock, if such preference, right, power or provision
specifically affects, covers or references the Series B Preferred Stock.
(d) So long as at least 4,537,000 shares of Series C Preferred Stock
remain outstanding (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), the Corporation shall not (whether by amendment, consolidation,
merger, or otherwise), without the written consent or affirmative vote of the
holders of at least 66 2/3% 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) authorize or designate, or obligate
itself to authorize or designate, any shares of capital stock of the Corporation
with preference or priority over or on a parity with the Series C Preferred
Stock (or increase the rights of any existing class or series of capital stock
so as to give such class or series of capital stock preference or priority over
or place it on a parity
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with the Series C Preferred Stock) with respect to dividend rights, liquidation
preferences, redemption rights or anti-dilution protection, (ii) pay any
dividend or distribution on any shares of capital stock that ranks junior to the
Series C Preferred Stock with respect to the right to receive dividends or
liquidation payments, or (iii) amend, alter, repeal or waive any preference,
special right or other power of the Series C Preferred Stock or any provision of
the Certificate of Incorporation or the Corporation's By-laws relative to the
Series C Preferred Stock, if such preference, right, power or provision
specifically affects, covers or references the Series C Preferred Stock.
(e) So long as at least 1,176,000 shares of Series D Preferred Stock
remain outstanding (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization affecting
such shares), the Corporation shall not (whether by amendment, consolidation,
merger, or otherwise), without the written consent or affirmative vote of the
holders of at a majority of the then outstanding shares of Series D Preferred
Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class, (i) authorize or designate, or obligate
itself to authorize or designate, any shares of capital stock of the Corporation
with preference or priority over or on a parity with the Series D Preferred
Stock (or increase the rights of any existing class or series of capital stock
so as to give such class or series of capital stock preference or priority over
or place it on a parity with the Series D Preferred Stock) with respect to
dividend rights, liquidation preferences, redemption rights, anti-dilution
protection, conversion rights or voting rights, (ii) pay any dividend or
distribution on any shares of capital stock that ranks junior to the Series D
Preferred Stock with respect to the right to receive dividends or liquidation
payments or (iii) amend, alter, repeal or waive any preference, special right or
other power of the Series D Preferred Stock or any provision of the Certificate
of Incorporation or the Corporation's By-laws relative to the Series D Preferred
Stock, if such preference, right, power or provision specifically affects,
covers or references the Series D Preferred Stock.
(f) Notwithstanding Sections 3(a)-(e) above, the Corporation shall
not, without first obtaining the written consent or affirmative vote of the
holders of shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and Series D Preferred Stock representing at least 51% of the
votes represented by all shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock then outstanding,
consenting or voting (as the case may be) together as a single class:
(i) make (or permit any corporation, a majority of the voting
stock of which is owned or controlled by the Corporation to make) any loan or
advance to, or own any stock or other securities of, any subsidiary or other
corporation, partnership or other entity unless it is wholly owned by the
Corporation;
(ii) make any loan or advance to any person, including, without
limitation, any employee or director of the Corporation or any subsidiary,
except advances and similar expenditures in the ordinary course of business or
under the terms of an employee stock or option plan approved by the Board of
Directors;
(iii) incur any indebtedness for borrowed money without prior
written approval by the Board of Directors in excess of $50,000 in the
aggregate:
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(iv) guarantee directly or indirectly, any indebtedness or
obligations except for trade accounts of any subsidiary arising in the ordinary
course of business;
(v) (A) merge with or into or consolidate with any other
corporation, (B) sell, lease, or otherwise dispose of all or substantially all
of its properties or assets, (C) enter into any agreement providing for, or
otherwise authorize, the acquisition by any person or any group of persons
(other than the Corporation, any of its direct or indirect subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Corporation or any of its direct or
indirect subsidiaries) acting together in any transaction or related series of
transactions, of such number of shares of the Corporation's voting capital stock
as causes such person, or group of persons, to own beneficially, directly or
indirectly, as of the time immediately after such transaction or series of
transactions, fifty percent (50%) or more of the combined voting power of the
voting capital stock of the Corporation other than as a result of an acquisition
of securities directly from the Corporation, or solely as a result of an
acquisition of securities by the Corporation which by reducing the number of
shares of the voting capital stock outstanding increases the proportionate
voting power represented by the voting capital stock owned by any such person to
fifty percent (50%) or more of the combined voting power of such voting capital
stock; or (D) effect a reclassification or recapitalization of the outstanding
capital stock of the Corporation;
(vi) voluntarily liquidate or dissolve;
(vii) increase the number of shares of Common Stock issuable
under the 2000 Stock Incentive Plan of the Corporation;
(viii) increase or decrease the number of shares of Common Stock
or Preferred Stock authorized under the Corporation's Certificate of
Incorporation, as may be amended from time to time;
(ix) redeem or repurchase any shares of Common Stock (other than
pursuant to contractual rights of repurchase at cost upon employee or consultant
service terminations or pursuant to Section 6 hereof);
(x) pay or declare any dividend on any shares of Common Stock;
(xi) permit any subsidiary of the Corporation to do any of the
foregoing; or
(xii) take any other action, including without limitation by way
of merger, business combination, recapitalization, reincorporation or other
corporate transaction or series of related transactions, the consummation of
which would have substantially the same effect of any of the foregoing.
4. 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.
(i) Each share of Series A Preferred Stock shall be convertible,
at the option of the holder thereof, at any time and from time to time, and
without the payment of additional consideration by the holder thereof, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing $.50 by the Series A Conversion Price (as defined below) in effect
at the time of conversion. The "Series A Conversion Price" is, immediately
following the Effective Time, $0.25. Such Series A Conversion Price, and the
rate at which shares of Series A Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below.
(ii) 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, and
without the payment of additional consideration by the holder thereof, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing $.8634 by the Series B Conversion Price (as defined below) in effect
at the time of conversion. The "Series B Conversion Price" is, immediately
following the Effective Time, $.4317. Such Series B Conversion Price, and the
rate at which shares of Series B Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below.
(iii) 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, and without the payment of additional consideration by the holder thereof,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $.86737 by the Series C Conversion Price (as defined
below) in effect at the time of conversion. The "Series C Conversion Price" is,
immediately following the Effective Time, $.433685. Such Series C Conversion
Price, and the rate at which shares of Series C Preferred Stock may be converted
into shares of Common Stock, shall be subject to adjustment as provided below.
(iv) Each share of Series D Preferred Stock shall be convertible,
at the option of the holder thereof, at any time and from time to time, and
without the payment of additional consideration by the holder thereof, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing $2.55 by the Series D Conversion Price (as defined below) in effect
at the time of conversion. The "Series D Conversion Price" is, immediately
following the Effective Time, $1.275. Such Series D Conversion Price, and the
rate at which shares of Series D Preferred Stock may be converted into shares of
Common Stock, shall be subject to adjustment as provided below.
(v) In the event of a notice of redemption of any shares of
Preferred Stock pursuant to Section 6 hereof, the Conversion Rights of the
shares designated for redemption shall terminate at the close of business on the
first full day preceding the date fixed for redemption, unless the redemption
price is not paid on such redemption date, in which case the Conversion Rights
for such shares shall continue until such price is paid in full. In the event of
a liquidation of the Corporation, 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 liquidation to the holders of Preferred Stock.
In the event of redemption or liquidation, the Corporation shall provide to each
holder of shares of Preferred Stock at least 15 days prior to the
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termination of the Conversion Right, notice of such redemption or event of
liquidation which notice shall set forth the full amounts that will be
distributable on such liquidation or redemption, as the case may be.
(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, the Corporation shall pay cash
equal to such fraction multiplied by the then effective Series A Conversion
Price, Series B Conversion Price, Series C Conversion Price or Series D
Conversion Price, as the case may be.
(c) 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 the Preferred Stock represented by such certificate or certificates,
provided, however that in the event of an mandatory conversion pursuant to
Section 5 below, the outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent. 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
("Conversion Date"), and the shares of Common Stock issuable upon conversion of
the shares represented by such certificate shall be deemed to be outstanding of
record as of such date, provided, however, that if the conversion is in
connection with an underwritten offer of securities registered pursuant to the
Securities Act of 1933, as amended, the conversion may, at the option of any
holder tendering Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock for conversion, be conditioned upon
the closing of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock or Series D Preferred Stock shall not be deemed to have converted such
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock until immediately prior to the closing of the sale of
such securities. 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 shares of Common Stock to which such holder shall be entitled, together with
cash in lieu of any fraction of a share, plus any declared or accumulated, but
unpaid dividend on the converted Preferred Stock.
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(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 Preferred
Stock. Before taking any action which would cause an adjustment reducing the
Series A Conversion Price, the Series B Conversion Price, the Series C
Conversion Price or the Series D Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock, respectively, 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 Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price or Series D Conversion Price.
(iii) Upon any such conversion, no adjustment to the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price or Series
D Conversion Price shall be made for any declared but unpaid dividends on the
Preferred Stock surrendered for conversion or on the Common Stock delivered upon
conversion.
(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 dividends
declared but unpaid thereon. Any shares of Preferred Stock so converted shall be
retired and cancelled and shall not be reissued, and the Corporation (without
the need for stockholder action) may from time to time take such appropriate
action as may be necessary to reduce the authorized number of shares of such
series of Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issuance or delivery of shares of Common
Stock upon conversion of shares of Preferred Stock pursuant to this Section 4.
The Corporation shall not, however, be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
shares of Common Stock in a name other than that in which the shares of
Preferred Stock so converted were registered, and no such issuance or delivery
shall be made unless and until the person or entity requesting such issuance has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(d) Adjustments to Conversion Prices for Diluting Issues:
(i) Special Definitions. For purposes of this Section 4, 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.
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(B) "Series A Original Issue Date" shall mean the date on
which a share of Series A Preferred Stock was first issued.
(C) "Series B Original Issue Date" shall mean the date on
which a share of Series B Preferred Stock was first issued.
(D) "Series C Original Issue Date" shall mean the date on
which a share of Series C Preferred Stock was first issued.
(E) "Series D Original Issue Date" shall mean the date on
which a share of Series D Preferred Stock was first issued.
(F) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock, but excluding Options.
(G) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Subsection 4(d)(iii) below,
deemed to be issued) by the Corporation, other than:
(I) shares of Common Stock issued or issuable upon
conversion or exchange of any Convertible
Securities or exercise of any Options outstanding
on the Series D Original Issue Date;
(II) shares of Common Stock or Preferred Stock issued
or issuable as a dividend or distribution on
Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D
Preferred Stock, provided the number of shares
issued pursuant to such dividend or distribution
on each share of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock (after giving effect to
the conversion of all such shares into Common
Stock) is the same;
(III) shares of Common Stock issued or issuable by
reason of a dividend, stock split, split-up or
other distribution on shares of Common Stock that
is covered by Subsection 4(e) or 4(f) below;
(IV) up to 31,442,917 shares of Common Stock (or
Options with respect thereto), or such
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greater number as may be approved by the Board of
Directors of the Corporation and by the holders of
shares of Preferred Stock representing two-thirds
of the votes represented by all outstanding shares
of Preferred Stock, issued or issuable to
employees or directors of, or consultants to, the
Corporation pursuant to a plan or arrangement
approved by the Board of Directors of the
Corporation and by a majority of the members of
the Board of Directors who are not employees of
the Corporation or any of its subsidiaries
(provided that any Options for such shares that
expire or terminate unexercised or any restricted
stock repurchased by the Corporation shall not be
counted toward such maximum number unless and
until such shares are regranted as new stock
grants (or as new Options) pursuant to the terms
of any such plan or arrangement);
(V) shares of Common Stock or Convertible Securities
issued solely in consideration for the acquisition
(whether by merger or otherwise) by the
Corporation or any of its subsidiaries of all or
substantially all of the stock or assets of any
other entity pursuant to a transaction approved by
the Board of Directors of the Corporation and by a
majority of the members of the Board of Directors
who are not employees of the Corporation or any of
its subsidiaries; provided that the Corporation
and its stockholders own not less than a majority
of the voting power of the surviving or successor
entity; or
(VI) shares of Common Stock, Options or Convertible
Securities issued or granted in connection with
any present or future borrowing, loan, line of
credit, equipment or real estate leasing or
similar financing arrangement that is approved by
the Board of Directors of the Corporation and by a
majority of the members of the Board of
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Directors who are not employees of the Corporation
or any of its subsidiaries.
provided that the aggregate number of shares of Common Stock issued (or subject
to Options or Convertible Securities issued) pursuant to clauses (V) and (VI) of
this Subsection 4(d)(i)(G) shall not exceed 10% of the issued and outstanding
shares of Common Stock of the Corporation (after giving effect to the conversion
of all outstanding Preferred Stock and the exercise of all outstanding Options).
(ii) No Adjustment of Conversion Price.
(A) No adjustment in the Series A Conversion Price shall be
made as the result of the issuance of Additional Shares of Common Stock if: (a)
the consideration per share (determined pursuant to Subsection 4(d)(v)) for such
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is equal to or greater than the applicable Series A Conversion Price
in effect immediately prior to the issuance or deemed issuance of such
Additional Shares of Common Stock, or (b) prior to such issuance or deemed
issuance, the Corporation receives written notice from the holders of at least
60% of the then outstanding shares of Series A Preferred Stock agreeing that no
such adjustment shall be made as the result of the issuance or deemed issuance
of Additional Shares of Common Stock. Subsection 4(d)(ii)(A)(b) may only be
amended upon the affirmative vote of the holders of 60% of the Series A
Preferred Stock then outstanding.
(B) No adjustment in the Series B Conversion Price shall be
made as the result of the issuance of Additional Shares of Common Stock if: (a)
the consideration per share (determined pursuant to Subsection 4(d)(v)) for such
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is equal to or greater than the applicable Series B Conversion Price
in effect immediately prior to the issuance or deemed issuance of such
Additional Shares of Common Stock, or (b) prior to such issuance or deemed
issuance, the Corporation receives written notice from the holders of at least
66 2/3% of the then outstanding shares of Series B Preferred Stock agreeing that
no such adjustment shall be made as the result of the issuance or deemed
issuance of Additional Shares of Common Stock. Subsection 4(d)(ii)(B)(b) may
only be amended upon the affirmative vote of the holders of 66 2/3% of the
Series B Preferred Stock then outstanding.
(C) No adjustment in the Series C Conversion Price shall be
made as the result of the issuance of Additional Shares of Common Stock if: (a)
the consideration per share (determined pursuant to Subsection 4(d)(v)) for such
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is equal to or greater than the applicable Series C Conversion Price
in effect immediately prior to the issuance or deemed issuance of such
Additional Shares of Common Stock, or (b) prior to such issuance or deemed
issuance, the Corporation receives written notice from the holders of at least
66 2/3% of the then outstanding shares of Series C Preferred Stock agreeing that
no such adjustment shall be made as the result of the issuance or deemed
issuance of Additional Shares of Common Stock. Subsection 4(d)(ii)(C)(b) may
only be amended upon the affirmative vote of the holders of at least 66 2/3% of
the Series C Preferred Stock then outstanding.
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(D) No adjustment in the Series D Conversion Price shall be
made as the result of the issuance of Additional Shares of Common Stock if: (a)
the consideration per share (determined pursuant to Subsection 4(d)(v)) for such
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is equal to or greater than the applicable Series D Conversion Price
in effect immediately prior to the issuance or deemed issuance of such
Additional Shares of Common Stock, or (b) prior to such issuance or deemed
issuance, the Corporation receives written notice from the holders of a majority
of the then outstanding shares of Series D Preferred Stock agreeing that no such
adjustment shall be made as the result of the issuance or deemed issuance of
Additional Shares of Common Stock. Subsection 4(d)(ii)(D)(b) may only be amended
upon the affirmative vote of the holders of a majority of the Series D Preferred
Stock then outstanding.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock.
(A) If the Corporation at any time or from time to time
shall issue any Options or Convertible Securities (excluding Options or
Convertible Securities which, upon exercise, conversion or exchange thereof,
would entitle the holder thereof to receive shares of Common Stock which are
specifically excepted from the definition of Additional Shares of Common Stock
by Subsection 4(d)(i)(G) above) 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.
(B) If the terms of any Option or Convertible Security, the
issuance of which resulted in an adjustment to the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price or Series D Conversion
Price pursuant to the terms of Subsection 4(d)(iv) below, are revised (either
automatically pursuant the provisions contained therein or as a result of an
amendment to such terms) to provide for either (1) any increase or decrease in
the number of shares of Common Stock issuable upon the exercise, conversion or
exchange of any such Option or Convertible Security or (2) any increase or
decrease in the consideration payable to the Corporation upon such exercise,
conversion or exchange, then, effective upon such increase or decrease becoming
effective, the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price or Series D Conversion Price, as applicable, computed upon the
original issue of such Option or Convertible Security (or upon the occurrence of
a record date with respect thereto) shall be readjusted to such Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price or Series
D Conversion Price as would have obtained had such revised terms been in effect
upon the original date of issuance of such Option or Convertible Security.
Notwithstanding the foregoing, no adjustment pursuant to this clause (B) shall
have the effect of increasing the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price or Series D Conversion Price to an amount which
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exceeds the lower of (i) the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price or Series D Conversion Price, as applicable, on
the original adjustment date, or (ii) the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price or Series D Conversion Price, as
applicable, that would have resulted from any issuances of Additional Shares of
Common Stock between the original adjustment date and such readjustment date.
(C) If the terms of any Option or Convertible Security
(excluding Options or Convertible Securities which, upon exercise, conversion or
exchange thereof, would entitle the holder thereof to receive shares of Common
Stock which are specifically excepted from the definition of Additional Shares
of Common Stock by Subsection 4(d)(i)(G) above), the issuance of which did not
result in an adjustment to the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price or Series D Conversion Price pursuant to the
terms of Subsection 4(d)(iv) below (either because the consideration per share
(determined pursuant to Subsection 4(d)(v) hereof) of the Additional Shares of
Common Stock subject thereto was equal to or greater than the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price or Series
D Conversion Price, as applicable, then in effect, or because such Option or
Convertible Security was issued before the Series A Original Issue Date, Series
B Original Issue Date, Series C Original Issue Date or Series D Original Issue
Date, as applicable), are revised after the Series A Original Issue Date, Series
B Original Issue Date, Series C Original Issue Date or Series D Original Issue
Date, as applicable (either automatically pursuant the provisions contained
therein or as a result of an amendment to such terms), to provide for either (1)
any increase or decrease in the number of shares of Common Stock issuable upon
the exercise, conversion or exchange of any such Option or Convertible Security
or (2) any increase or decrease in the consideration payable to the Corporation
upon such exercise, conversion or exchange, then such Option or Convertible
Security, as so amended, and the Additional Shares of Common Stock subject
thereto (determined in the manner provided in Subsection 4(d)(iii)(A) above)
shall be deemed to have been issued effective upon such increase or decrease
becoming effective.
(D) Upon the expiration or termination of any unexercised
Option or unconverted or unexchanged Convertible Security which resulted (either
upon its original issuance or upon a revision of its terms) in an adjustment to
the Series A Conversion Price, Series B Conversion Price, Series C Conversion
Price or Series D Conversion Price pursuant to the terms of Subsection 4(d)(iv)
below, the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price or Series D Conversion Price, as applicable, shall be
readjusted to such Series A Conversion Price, Series B Conversion Price, Series
C Conversion Price or Series D Conversion Price as would have obtained had such
Option or Convertible Security never been issued.
(E) No adjustment in the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price or Series D Conversion Price shall
be made upon the issue of shares of Common Stock or Convertible Securities upon
the exercise of Options or the issue of shares of Common Stock upon the
conversion or exchange of Convertible Securities, provided an appropriate
adjustment has been made upon the issuance of such Options or Convertible
Securities, to the extent required.
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<PAGE>
(iv) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock.
(A) In the event the Corporation shall at any time after the
Effective Time issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 4(d)(iii)),
without consideration or for a consideration per share less than the applicable
Series A Conversion Price in effect immediately prior to such issue, then and in
such event, such Series A Conversion Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Series A Conversion Price by a fraction, (A) the numerator of
which shall be (1) the number of shares of Common Stock outstanding immediately
prior to such issue plus (2) the number of shares of Common Stock which the
aggregate consideration received or to be received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series A Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that for the purpose of this Subsection 4(d)(iv), all shares of Common Stock
issuable upon exercise, conversion or exchange of Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding.
(B) In the event the Corporation shall at any time after the
Effective Time issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 4(d)(iii)),
without consideration or for a consideration per share less than the applicable
Series B Conversion Price in effect immediately prior to such issue, then and in
such event, such Series B Conversion Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Series B Conversion Price by a fraction, (A) the numerator of
which shall be (1) the number of shares of Common Stock outstanding immediately
prior to such issue plus (2) the number of shares of Common Stock which the
aggregate consideration received or to be received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series B Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that, for the purpose of this Subsection 4(d)(iv), all shares of Common Stock
issuable upon exercise, conversion or exchange of Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding.
(C) In the event the Corporation shall at any time after the
Effective Time issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 4(d)(iii)),
without consideration or for a consideration per share less than the applicable
Series C Conversion Price in effect immediately prior to such issue, then and in
such event, such Series C Conversion Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Series C Conversion Price by a fraction, (A) the numerator of
which shall be (1) the number of shares of Common Stock outstanding immediately
prior to such issue plus (2) the number of shares of Common Stock which the
aggregate consideration received or to be
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received by the Corporation for the total number of Additional Shares of Common
Stock so issued would purchase at such Series C Conversion Price; and (B) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued; provided that, for the purpose of this Subsection
4(d)(iv), all shares of Common Stock issuable upon exercise, conversion or
exchange of Options or Convertible Securities outstanding immediately prior to
such issue shall be deemed to be outstanding.
(D) In the event the Corporation shall at any time after the
Effective Time issue Additional Shares of Common Stock (including Additional
Shares of Common Stock deemed to be issued pursuant to Subsection 4(d)(iii)),
without consideration or for a consideration per share less than the applicable
Series D Conversion Price in effect immediately prior to such issue, then and in
such event, such Series D Conversion Price shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent) determined by
multiplying such Series D Conversion Price by a fraction, (A) the numerator of
which shall be (1) the number of shares of Common Stock outstanding immediately
prior to such issue plus (2) the number of shares of Common Stock which the
aggregate consideration received or to be received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Series D Conversion Price; and (B) the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that, for the purpose of this Subsection 4(d)(iv), all shares of Common Stock
issuable upon exercise, conversion or exchange of Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding.
(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:
(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;
(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
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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(d)(iii), relating to Options
and Convertible Securities, shall be determined by dividing
(x) 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
(y) 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.
(vi) Multiple Closing Dates. In the event the Corporation shall
issue on more than one date Additional Shares of Common Stock which are
comprised of shares of the same series or class of Preferred Stock, and such
issuance dates occur within a period of no more than 120 days, then, upon the
final such issuance, the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price and Series D Conversion Price shall be readjusted to
give effect to all such issuances as if they occurred on the date of the final
such issuance (and without giving effect to any adjustments as a result of such
prior issuances within such period).
(e) Adjustment for Stock Splits and Combinations. If the Corporation
shall at any time or from time to time after the Effective Time effect a
subdivision of the outstanding Common Stock or combine the outstanding shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock, the Series A Conversion Price, the Series B Conversion
Price, the Series C Conversion Price or the Series D Conversion Price, as
applicable, then in effect immediately before that subdivision or combination
shall be proportionately decreased. If the Corporation shall at any time or from
time to time after the Effective Time combine the outstanding shares of Common
Stock or effect a subdivision of the outstanding shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock, the Series A Conversion Price, the Series B Conversion Price, the Series
C Conversion Price or the Series D Conversion Price, as applicable, then in
effect immediately before the combination or subdivision 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.
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(f) Adjustment for Certain Dividends and Distributions. In the event
the Corporation at any time, or from time to time after the Effective Time shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Series A
Conversion Price, the Series B Conversion Price, the Series C Conversion Price
and the Series D Conversion Price then in effect immediately before such event
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 Series A Conversion Price, the Series B Conversion
Price, the Series C Conversion Price or the Series D Conversion Price, as
applicable, 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 Series A Conversion Price, the Series B Conversion Price, the
Series C Conversion Price or the Series D Conversion Price, as applicable, shall
be recomputed accordingly as of the close of business on such record date and
thereafter the Series A Conversion Price, the Series B Conversion Price, the
Series C Conversion Price or the Series D Conversion Price shall be adjusted
pursuant to this paragraph as of the time of actual payment of such dividends or
distributions; and provided further, however, that no such adjustment shall be
made if the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock, as applicable,
simultaneously receive (i) a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, as
applicable, had been converted into Common Stock on the date of such event or
(ii) a dividend or other distribution of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock,
as applicable, which are convertible, as of the date of such event, into such
number of shares of Common Stock as is equal to the number of additional shares
of Common Stock being issued with respect to each share of Common Stock in such
dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the event
the Corporation at any time or from time to time after the Effective Time 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) or in cash or
other property (other than cash out of earnings or earned surplus, determined in
accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the holders of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock shall receive upon
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conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the kind and amount of securities of the Corporation, cash
or other property which they would have been entitled to receive had such
Preferred Stock been converted into Common Stock on the date of such event and
had they 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 paragraph with respect to the rights of the
holders of such Preferred Stock; provided, however, that no such adjustment
shall be made if the holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock, as applicable,
simultaneously receive a dividend or other distribution of such securities, cash
or other property in an amount equal to the amount of such securities as they
would have received if all outstanding shares of such Preferred Stock had been
converted into Common Stock on the date of such event.
(h) Adjustment for Merger or Reorganization, etc. Subject to the
provisions of Subsection 2(c), if there shall occur any reorganization,
recapitalization, consolidation or merger involving the Corporation in which the
Common Stock (but not the Preferred Stock) is converted into or exchanged for
securities, cash or other property (other than a transaction covered by
paragraphs (e), (f) or (g) of this Section 4), then, following any such
reorganization, recapitalization, consolidation or merger, each share of
Preferred Stock shall be convertible into the kind and amount of securities,
cash or other property which a holder of the number of shares of Common Stock of
the Corporation issuable upon conversion of one share of such Preferred Stock
immediately prior to such reorganization, recapitalization, consolidation or
merger would have been entitled to receive pursuant to such transaction; 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 in this Section 4
set forth with respect 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
respective Conversion Prices) 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.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 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.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price, the Series B
Conversion Price, the Series C Conversion Price or the Series D Conversion Price
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 Series A Preferred Stock, Series
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B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, as
applicable, 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 certificate
setting forth (i) the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price and Series D Conversion Price then in effect, (ii) the
number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the conversion of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, and (iii) any and all adjustments made to the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, since the Series A Original Issue Date, Series B Original Issue
Date, Series C Original Issue Date or Series D Original Issue Date.
(k) Notice of Record Date. In the event:
(i) the Corporation shall take a record of the holders of its
Common Stock (or other stock or securities at the time issuable upon conversion
of the Preferred Stock) for the purpose of entitling or enabling them to receive
any dividend or other distribution (other than dividends payable solely in
Common Stock), or to receive any right to subscribe for or purchase any shares
of stock of any class or any other securities, or to receive any other right; or
(ii) of any capital reorganization of the Corporation, any
reclassification of the Common Stock of the Corporation, any consolidation or
merger of the Corporation with or into another corporation (other than a
consolidation or merger in which the Corporation is the surviving entity and its
Common Stock is not converted into or exchanged for any other securities or
property), or any transfer of all or substantially all of the assets of the
Corporation; or
(iii) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation,
then, and in each such case, the Corporation will mail or cause to be mailed to
the holders of the Preferred Stock a notice specifying, as the case may be, (i)
the record date for such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, consolidation, merger, transfer,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such other
stock or securities at the time issuable upon the conversion of the Preferred
Stock) shall be entitled to exchange their shares of Common Stock (or such other
stock or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, transfer, dissolution,
liquidation or winding-up. Such notice shall be mailed prior to the record date
or effective date for the event specified in such notice.
5. Mandatory Conversion.
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(a) Upon (x) the closing of the sale of shares of Common Stock, at a
price to the public of at least $7.00 per share following the Effective Time
(subject to appropriate adjustment for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such shares), in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, resulting in at least $40 million
of proceeds, net of underwriting discounts and commissions, or (y) the written
consent of the holders of at least 60% of the then outstanding shares of Series
A Preferred Stock and 66 2/3% of the then outstanding shares of Series B
Preferred Stock, 66 2/3% of the then outstanding shares of Series C Preferred
Stock and a majority of the then outstanding shares of Series D Preferred Stock
(the date of such closing or written consent being referred to as the "Mandatory
Conversion Date"), (i) all outstanding shares of Preferred Stock shall
automatically be converted into shares of Common Stock, at the then effective
conversion rate and (ii) the number of authorized shares of Preferred Stock
shall be automatically reduced by the number of shares of Preferred Stock that
had been designated as Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock, and all provisions
included under the caption "Series A, Series B, Series C and Series D Preferred
Stock", and all references to the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock in this Certificate
of Incorporation, shall be deleted and shall be of no further force or effect.
(b) All holders of record of shares of Preferred Stock shall be given
written notice of the Mandatory Conversion Date and the place designated for
mandatory conversion of all such shares of Preferred Stock pursuant to this
Section 5. Such notice need not be given in advance of the occurrence of the
Mandatory Conversion Date. Such notice shall 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). Upon receipt of such notice, 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 5. On the Mandatory Conversion Date,
all outstanding shares of Preferred Stock shall be deemed to have been converted
into shares of Common Stock, which shall be deemed to be outstanding of record,
and all rights with respect to the Preferred Stock so converted, including the
rights, if any, to receive notices and vote (other than as a holder of Common
Stock) 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. If so
required 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. As soon as practicable after
the Mandatory Conversion Date 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
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Subsection 4(b) in respect of any fraction of a share of Common Stock otherwise
issuable upon such conversion.
(c) 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 Mandatory Conversion Date, be deemed to have
been retired and cancelled 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. Such converted Preferred Stock may not be reissued, and the Corporation
may thereafter take such appropriate action (without the need for stockholder
action) as may be necessary to reduce the authorized number of shares of
Preferred Stock accordingly.
6. Redemption.
(a) Mandatory Redemption; Three Installments. Shares of Preferred
Stock shall be redeemed by the Corporation, at a price equal to (i) the greater
of (A) the sum of $.50 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares) plus an accumulating dividend accruing at a rate of $.04
per year (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such shares) until
paid in full, plus any declared but unpaid dividends thereon or (B) the Fair
Market Value on the date of the redemption request (the "Series A Redemption
Price"), in the case of the Series A Preferred Stock, (ii) the greater of (A)
the sum of $.8634 per share (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other similar recapitalizations affecting such
shares) plus an accumulating dividend accruing at a rate of $.0691 per year
(subject to appropriate adjustment for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such shares) until
paid in full, plus any declared but unpaid dividends thereon, or (B) the Fair
Market Value on the date of the redemption request (the "Series B Redemption
Price"), in the case of the Series B Preferred Stock, (iii) the greater of (A)
the sum of $.86737 per share (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other similar recapitalizations
affecting such shares) plus an accumulating dividend accruing at a rate of
$.0694 per year (subject to appropriate adjustment for stock splits, stock
dividends, combinations and other similar recapitalizations affecting such
shares) until paid in full, plus any declared but unpaid dividends thereon, or
(B) the Fair Market Value on the date of the redemption request (the "Series C
Redemption Price"), in the case of the Series C Preferred Stock, and (iv) the
greater of (A) the sum of $2.55 per share (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other similar recapitalizations
affecting such shares) plus an accumulating dividend accruing at a rate of $.204
per year (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other similar recapitalizations affecting such shares) until
paid in full, plus any declared but unpaid dividends thereon, or (B) the Fair
Market Value on the date of the redemption request (the "Series D Redemption
Price"), in the case of the Series D Preferred Stock in three annual
installments commencing 60 days after receipt by the Corporation at any time on
or after December 22, 2009, from the holders of Preferred Stock of written
notice requesting redemption of shares of Preferred Stock then held by such
requesting holders representing a majority of the votes represented by all the
then outstanding shares of Preferred Stock (the date of each such
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installment being referred to as a "Redemption Date"). On each Redemption Date,
the Corporation shall redeem that number of outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock determined by dividing (i) the total number of shares of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock, as applicable, requested to be redeemed by (ii) the number of
remaining Redemption Dates (including the Redemption Date to which such
calculation applies). If the Corporation does not have sufficient funds legally
available to redeem the Preferred Stock on any Redemption Date, the Corporation
shall redeem a pro rata portion (based on the aggregate amounts that would have
been payable on redemption of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock, respectively, to
be redeemed) of each holder's shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock out of
funds legally available therefor and shall redeem the remaining shares to have
been redeemed as soon as practicable after the Corporation has funds legally
available therefor. For purposes of this Section 6, the "Fair Market Value"
shall mean an amount equal to the fair market value of a share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock, as the case may be (giving effect to the value of the rights
and preferences of such shares as herein provided), determined as follows: the
Board of Directors shall endeavor in good faith to agree unanimously to the fair
market value of a share of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock, as the case may be. If
they are unable to do so within 30 days after the date of the redemption
request, an investment banking firm chosen by a majority in interest of the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock, as the case may be, and an
investment banking firm chosen by the Corporation shall each calculate such
value. In the event the difference between such valuations is less than 20% of
the higher valuation, then the Fair Market Value shall be deemed to be the
average of such two valuations. In the event that the difference between such
valuations is greater than 20% of the higher valuation, the two investment
banking firms shall designate a third investment banking firm which shall select
from the two valuations the valuation that such third firm determines to be
closer to its own valuation, and the valuation so selected shall be considered
the Fair Market Value. In all events, the fees and expenses of any such
investment banking firms shall be paid by the Corporation.
(b) Redemption Notice. Written notice of the redemption (the
"Redemption Notice") shall be mailed, postage prepaid, to each holder of record
of Preferred Stock, at its address last shown on the records of the Corporation,
not less than 30 days prior to each Redemption Date. Each Redemption Notice
shall state:
(I) the number of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock held by the holder
that the Corporation shall redeem on the
Redemption Date specified in the Redemption
Notice;
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(II) the Redemption Date and the Series A Redemption
Price, Series B Redemption Price, Series C
Redemption Price and Series D Redemption Price;
(III) the date upon which the holder's right to convert
such shares terminates (which date shall be five
full days before the Redemption Date); and
(IV) that the holder is to surrender to the
Corporation, in the manner and at the place
designated, his certificate or certificates
representing the shares of Preferred Stock to be
redeemed.
Any holder of record of Preferred Stock that did not join in the redemption
request pursuant to Section 6(a) shall have 15 days from the date the Redemption
Notice, properly addressed, is mailed to provide the Corporation with written
notice of his, her or its intention to participate in the redemption with
respect to any or all shares of Preferred Stock then held by such participating
holder; provided, however, no redemption shall take place with respect to shares
not elected to be redeemed by the holder of record.
(c) Surrender of Certificates; Payment. On or before the
applicable Redemption Date, each holder of shares of Preferred Stock to be
redeemed on such Redemption Date, unless such holder has exercised his right to
convert such shares as provided in Section 4 hereof, shall surrender the
certificate or certificates representing such shares to the Corporation, in the
manner and at the place designated in the Redemption Notice, and thereupon the
applicable Redemption Price for such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired. In the
event less than all of the shares of Preferred Stock represented by a
certificate are redeemed, a new certificate representing the unredeemed shares
of Preferred Stock shall be issued forthwith.
(d) Rights Subsequent to Redemption. If the Redemption Notice
shall have been duly given, and if on the applicable Redemption Date the
applicable Redemption Price payable upon redemption of the shares of Preferred
Stock to be redeemed on such Redemption Date is paid or tendered for payment,
then notwithstanding that the certificates evidencing any of the shares of
Preferred Stock so called for redemption shall not have been surrendered,
dividends with respect to such shares of Preferred Stock shall cease to accrue
after such Redemption Date and all rights with respect to such shares shall
forthwith after the Redemption Date terminate, except only the right of the
holders to receive the applicable Redemption Price without interest upon
surrender of their certificate or certificates therefor.
(e) Redeemed or Otherwise Acquired Shares. Any shares of
Preferred Stock which are redeemed or otherwise acquired by the Corporation or
any of its subsidiaries shall be automatically and immediately canceled and
shall not be reissued, sold or transferred.
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Neither the Corporation nor any of its subsidiaries may exercise any voting or
other rights granted to the holders of Preferred Stock.
(f) Other Redemptions or Acquisitions. Neither the Corporation
nor any Subsidiary shall redeem or otherwise acquire any shares of Preferred
Stock, except as expressly authorized herein or pursuant to a purchase offer
made pro rata to all holders of such series of Preferred Stock on the basis of
the number of shares of Preferred Stock owned by each such holder.
7. Waiver. Any waiver affecting the rights of the holders of Series A
Preferred Stock (but not Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock) set forth herein may be effected by the affirmative
consent or vote of the holders of more than 60% of the shares of Series A
Preferred Stock then outstanding. Any waiver affecting the rights of the holders
of Series B Preferred Stock (but not Series A Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock) set forth herein may be effected by
the affirmative consent or vote of the holders of more than 66 2/3% of the
shares of Series B Preferred Stock then outstanding. Any waiver affecting the
rights of the holders of Series C Preferred Stock (but not Series A Preferred
Stock, Series B Preferred Stock or Series D Preferred Stock) set forth herein
may be effected by the affirmative consent or vote of the holders of more than
66 2/3% of the shares of Series C Preferred Stock then outstanding. Any waiver
affecting the rights of the holders of Series D Preferred Stock (but not Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock) set
forth herein may be effected by the affirmative consent or vote of the holders
of a majority of the shares of Series D Preferred Stock then outstanding.
Subject to the voting rights set forth in Sections 3(b)-(e), any waiver
affecting the rights of the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock set forth
herein may be effected by the affirmative consent or vote of the holders of
shares representing more than 66 2/3% of the voting power of all outstanding
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, consenting or voting (as the case may be)
together as a single class, provided such waiver does not specifically cover or
reference a particular series of Preferred Stock.
FIFTH: Except as otherwise provided herein, 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 this Certificate of Incorporation, and all rights conferred upon
stockholders herein are granted subject to this reservation.
SIXTH: In furtherance and not in limitation of the powers conferred upon it
by the General Corporation Law of the State of Delaware, and subject to the
terms of any series of Preferred Stock, the Board of Directors shall have the
power to adopt, amend, alter or repeal the By-laws of the Corporation by the
affirmative vote of a majority of the directors present at any regular or
special meeting of the Board of Directors at which a quorum is present. The
stockholders may not adopt, amend, alter or repeal the By-laws of the
Corporation, or adopt any provision inconsistent therewith, unless such action
is approved, in addition to any other vote required by this Certificate of
Incorporation, by the affirmative vote of the holders of at least seventy-five
percent (75%) of the votes that all the stockholders would be entitled to cast
in any annual election of directors or class of directors. Notwithstanding any
other provisions of law, this Certificate of Incorporation or the By-laws of the
Corporation, and notwithstanding the fact
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that a lesser percentage may be specified by law, the affirmative vote of the
holders of at least seventy-five percent (75%) of the votes which all the
stockholders would be entitled to cast in any annual election of directors or
class of directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article SIXTH.
SEVENTH: Except to the extent that the General Corporation Law of the State
of Delaware prohibits the elimination or limitation of liability of directors
for breaches of fiduciary duty, no director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty as a director, notwithstanding any provision of
law imposing such liability. No amendment to or repeal of this provision shall
apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal. If the General Corporation
Law of the State of Delaware is amended to permit further elimination or
limitation of the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware as so amended.
EIGHTH: The Corporation shall provide indemnification as follows:
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 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 or she 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, partner, employee 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 in such capacity, against all expenses
(including attorneys' fees), liabilities, losses, judgments, fines, excise taxes
and penalties arising under the Employee Retirement Income Security Act of 1974,
and amounts paid in settlement actually and reasonably incurred by or on behalf
of Indemnitee in connection with such action, suit or proceeding and any appeal
therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee
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 Indemnitee did not act in good faith and in a manner which
Indemnitee 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.
2. Actions or Suits by or in the Right of the Corporation. The Corporation
shall indemnify any Indemnitee who was or is a party to or 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 Indemnitee 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
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of the Corporation, as a director, officer, partner, employee 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 in such capacity, against all
expenses (including attorneys' fees) and, to the extent permitted by law,
amounts paid in settlement actually and reasonably incurred by or on behalf of
Indemnitee in connection with such action, suit or proceeding and any appeal
therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, except that no indemnification shall be made under this Section 2
in respect of any claim, issue or matter as to which Indemnitee 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, Indemnitee 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 any
other provisions of this Article EIGHTH, 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 EIGHTH, or in defense
of any claim, issue or matter therein, or on appeal from any such action, suit
or proceeding, Indemnitee shall be indemnified against all expenses (including
attorneys' fees) actually and reasonably incurred by or on behalf of Indemnitee
in connection therewith.
4. Notification and Defense of Claim. As a condition precedent to an
Indemnitee's right to be indemnified, such Indemnitee must notify the
Corporation in writing as soon as practicable of any action, suit, proceeding or
investigation involving such Indemnitee 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 Indemnitee. After notice
from the Corporation to Indemnitee of its election so to assume such defense,
the Corporation shall not be liable to Indemnitee for any legal or other
expenses subsequently incurred by Indemnitee in connection with such action,
suit, proceeding or investigation, other than as provided below in this Section
4. Indemnitee shall have the right to employ his or her own counsel in
connection with such action, suit, proceeding or investigation, 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 Indemnitee unless
(i) the employment of counsel by Indemnitee has been authorized by the
Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that
there may be a conflict of interest or position on any significant issue between
the Corporation and Indemnitee in the conduct of the defense of such action,
suit, proceeding or investigation or (iii) the Corporation shall not in fact
have employed counsel to assume the defense of such action, suit, proceeding or
investigation, in each of which cases the fees and expenses of counsel for
Indemnitee shall be at the expense of the Corporation, except as otherwise
expressly provided by this Article EIGHTH. The Corporation shall not be
entitled, without the consent of Indemnitee, to assume the defense of any claim
brought by or in the right of the Corporation or as to which counsel for
Indemnitee shall have reasonably made the conclusion provided for in clause (ii)
above. The Corporation
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shall not be required to indemnify Indemnitee under this Article EIGHTH for any
amounts paid in settlement of any action, suit, proceeding or investigation
effected without its written consent. The Corporation shall not settle any
action, suit, proceeding or investigation in any manner which would impose any
penalty or limitation on Indemnitee without Indemnitee's written consent.
Neither the Corporation nor Indemnitee will unreasonably withhold or delay its
consent to any proposed settlement.
5. Advance of Expenses. Subject to the provisions of Section 6 of this
Article EIGHTH, in the event of any threatened or pending action, suit,
proceeding or investigation of which the Corporation receives notice under this
Article EIGHTH, any expenses (including attorneys' fees) incurred by or on
behalf of Indemnitee in defending an 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 or on behalf of Indemnitee in advance of the final disposition of
such matter shall be made only upon receipt of an undertaking by or on behalf of
Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Corporation as authorized in this Article EIGHTH; and provided further that
no such advancement of expenses shall be made under this Article EIGHTH if it is
determined (in the manner described in Section 6) that (i) Indemnitee did not
act in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Corporation, or (ii) with respect to any
criminal action or proceeding, Indemnitee had reasonable cause to believe his or
her conduct was unlawful. Such undertaking shall be accepted without reference
to the financial ability of Indemnitee to make such repayment.
6. Procedure for Indemnification and Advancement of Expenses. In order to
obtain indemnification or advancement of expenses pursuant to Section 1, 2, 3 or
5 of this Article EIGHTH, an Indemnitee shall submit to the Corporation a
written request. Any such advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of Indemnitee, unless (i) the Corporation has assumed the defense pursuant to
Section 4 of this Article EIGHTH (and none of the circumstances described in
Section 4 of this Article EIGHTH that would nonetheless entitle the Indemnitee
to indemnification for the fees and expenses of separate counsel have occurred)
or (ii) the Corporation determines within such 60-day period that Indemnitee did
not meet the applicable standard of conduct set forth in Section 1, 2 or 5 of
this Article EIGHTH, as the case may be. Any such indemnification, unless
ordered by a court, shall be made with respect to requests under Section 1 or 2
only as authorized in the specific case upon a determination by the Corporation
that the indemnification of Indemnitee is proper because Indemnitee has met 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 (a) by a majority vote 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"), whether or not a quorum, (b) by a committee of disinterested
directors designated by majority vote of disinterested directors, whether or not
a quorum, (c) if there are no disinterested directors, or if the disinterested
directors so direct, by independent legal counsel (who may, to the extent
permitted by law, be regular legal counsel to the Corporation) in a written
opinion, or (d) by the stockholders of the Corporation.
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7. Remedies. The right to indemnification or advancement of expenses as
granted by this Article EIGHTH shall be enforceable by Indemnitee in any court
of competent jurisdiction. 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 Indemnitee has met the applicable standard
of conduct, nor an actual determination by the Corporation pursuant to Section 6
of this Article EIGHTH that Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that
Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses
(including attorneys' fees) reasonably incurred in connection with successfully
establishing Indemnitee's right to indemnification, in whole or in part, in any
such proceeding shall also be indemnified by the Corporation. Notwithstanding
the foregoing, in any suit brought by Indemnitee to enforce a right to
indemnification hereunder it shall be a defense that the Indemnitee has not met
any applicable standard for indemnification set forth in the General Corporation
Law of the State of Delaware.
8. Limitations. Notwithstanding anything to the contrary in this Article
EIGHTH, except as set forth in Section 7 of this Article EIGHTH, the Corporation
shall not indemnify an Indemnitee pursuant to this Article EIGHTH in connection
with a proceeding (or part thereof) initiated by such Indemnitee unless the
initiation thereof was approved by the Board of Directors of the Corporation.
Notwithstanding anything to the contrary in this Article EIGHTH, the Corporation
shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed
from the proceeds of insurance, and in the event the Corporation makes any
indemnification payments to an Indemnitee and such Indemnitee is subsequently
reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund
indemnification payments to the Corporation to the extent of such insurance
reimbursement.
9. Subsequent Amendment. No amendment, termination or repeal of this
Article EIGHTH or of the relevant provisions of the General Corporation Law of
the State of Delaware or any other applicable laws shall adversely 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 actions, transactions or facts occurring prior
to the final adoption of such amendment, termination or repeal.
10. Other Rights. The indemnification and advancement of expenses provided
by this EIGHTH Article 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 Indemnitee's
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 Indemnitee. Nothing contained in this Article
EIGHTH 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 EIGHTH. 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
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or other persons serving the Corporation and such rights may be equivalent to,
or greater or less than, those set forth in this Article EIGHTH.
11. Partial Indemnification. If an Indemnitee is entitled under any
provision of this Article EIGHTH 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 or on behalf of
Indemnitee 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 Indemnitee for the portion of such
expenses (including attorneys' fees), judgments, fines or amounts paid in
settlement to which Indemnitee is entitled.
12. 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 or her 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.
13. Savings Clause. If this Article EIGHTH 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
ArticleEIGHTH that shall not have been invalidated and to the fullest extent
permitted by applicable law.
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).
NINTH: This Article NINTH is inserted for the management of the business
and for the conduct of the affairs of the Corporation.
1. General Powers. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors.
2. Number of Directors; Election of Directors. Subject to the rights of
holders of any series of Preferred Stock to elect directors, the number of
directors of the Corporation shall be established by the Board of Directors.
Election of directors need not be by written ballot, except as and to the extent
provided in the By-laws of the Corporation.
3. Classes of Directors. Subject to the rights of holders of any series of
Preferred Stock to elect directors, the Board of Directors shall be and is
divided into three classes, designated Class I, Class II and Class III. Each
class shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. The Board
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of Directors is authorized to assign members of the Board of Directors already
in office to Class I, Class II or Class III.
4. Terms of Office. Subject to the rights of holders of any series of
Preferred Stock to elect directors, each director shall serve for a term ending
on the date of the third annual meeting of stockholders following the annual
meeting of stockholders at which such director was elected; provided, that each
director initially assigned to Class I shall serve for a term expiring at the
Corporation's annual meeting of stockholders held in 2008; each director
initially assigned to Class II shall serve for a term expiring at the
Corporation's annual meeting of stockholders held in 2009; and each director
initially assigned to Class III shall serve for a term expiring at the
Corporation's annual meeting of stockholders held in 2010; provided further,
that the term of each director shall continue until the election and
qualification of his or her successor and be subject to his or her earlier
death, resignation or removal.
5. Quorum. The greater of (a) a majority of the directors at any time in
office and (b) one-third of the number of directors fixed pursuant to Section 2
of this Article NINTH shall constitute a quorum of the Board of Directors. If at
any meeting of the Board of Directors there shall be less than such a quorum, a
majority of the directors present may adjourn the meeting from time to time
without further notice other than announcement at the meeting, until a quorum
shall be present.
6. Action at Meeting. Every act or decision done or made by a majority of
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the Board of Directors unless a greater number is
required by law or by this Certificate of Incorporation.
7. Removal. Subject to the rights of holders of any series of Preferred
Stock, directors of the Corporation may be removed only for cause and only by
the affirmative vote of the holders of at least seventy-five percent (75%) of
the votes which all the stockholders would be entitled to cast in an election of
directors.
8. Vacancies. Subject to the rights of holders of any series of Preferred
Stock, any vacancy or newly created directorships in the Board of Directors,
however occurring, shall be filled only by vote of a majority of the directors
then in office, although less than a quorum, or by a sole remaining director and
shall not be filled by the stockholders. A director elected to fill a vacancy
shall hold office until the next election of the class for which such director
shall have been chosen, subject to the election and qualification of a successor
and to such director's earlier death, resignation or removal.
9. Stockholder Nominations and Introduction of Business, Etc. Advance
notice of stockholder nominations for election of directors and other business
to be brought by stockholders before a meeting of stockholders shall be given in
the manner provided by the By-laws of the Corporation.
10. Amendments to Article. Notwithstanding any other provisions of law,
this Certificate of Incorporation or the By-laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least
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seventy-five percent (75%) of the votes which all the stockholders would be
entitled to cast in an election of directors shall be required to amend or
repeal, or to adopt any provision inconsistent with, this Article NINTH.
TENTH: Stockholders of the Corporation may not take any action by written
consent in lieu of a meeting. Notwithstanding any other provisions of law, this
Certificate of Incorporation or the By-laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
votes which all the stockholders would be entitled to cast in any annual
election of directors or class of directors shall be required to amend or
repeal, or to adopt any provision inconsistent with, this Article TENTH.
ELEVENTH: Special meetings of stockholders for any purpose or purposes may
be called at any time by the Board of Directors, the Chairman of the Board or
the Chief Executive Officer, but such special meetings may not be called by any
other person or persons. Business transacted at any special meeting of
stockholders shall be limited to matters relating to the purpose or purposes
stated in the notice of meeting. Notwithstanding any other provision of law,
this Certificate of Incorporation or the By-laws of the Corporation, and
notwithstanding the fact that a lesser percentage may be specified by law, the
affirmative vote of the holders of at least seventy-five percent (75%) of the
votes which all the stockholders would be entitled to cast in an election of
directors shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article ELEVENTH.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which
restates, integrates and amends the certificate of incorporation of the
Corporation, and which has been duly adopted in accordance with Sections 228,
242 and 245 of the General Corporation Law of the State of Delaware, has been
executed by its duly authorized officer this ______ day of ___________, 2007.
NETEZZA CORPORATION
By:
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Name: Jitendra Saxena
Title: Chief Executive Officer
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