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EXHIBIT 10.4
SECOND
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CHARTONE, INC.
PURSUANT TO SECTION 242
OF THE
DELAWARE GENERAL CORPORATION LAW
* * * * *
CHARTONE, INC., a Delaware corporation (the "Corporation"), hereby
certifies as follows:
The Certificate of Incorporation of the Corporation was filed in the
office of the Secretary of State of the State of Delaware on September 1, 1999,
was amended and restated on April 28, 2000 pursuant to Section 242 and Section
245 of the Delaware General Corporation Law to, among other things, change the
name of the Corporation from "PASC Acquisition Corporation" to "ChartOne, Inc.",
and is hereby further amended and restated pursuant to Section 242 and Section
245 of the Delaware General Corporation Law. All amendments to the Certificate
of Incorporation reflected herein have been duly proposed by the Board of
Directors of the Corporation and duly adopted by the stockholder of the
Corporation in accordance with the provisions of such Sections.
This Second Amended and Restated Certificate of Incorporation restates
and integrates and further amends the Amended and Restated Certificate of
Incorporation of the
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Corporation. The text of the Amended and Restated Certificate of Incorporation
is amended to read as herein set forth in full:
ARTICLE I.
The name of the Corporation is:
ChartOne, Inc.
ARTICLE II.
The address of its registered office in the State of Delaware is
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.
ARTICLE III.
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.
ARTICLE IV.
The total number of shares of stock which the Corporation shall
have authority to issue is 25,830,000, consisting of (i) 7,500,000 shares of
Series A Convertible Preferred Stock, par value $0.01 per share, of the
Corporation (the "Series A Preferred Stock"), (ii) 2,130,000 shares of Series B
Convertible Preferred Stock, par value $0.01 per share, of the Corporation (the
"Series B Preferred Stock"), (iii) 1,200,000 shares of Series C Convertible
Preferred Stock, par value $0.01 per share, of the Corporation (the "Series C
Preferred Stock," and together with the Series A Preferred Stock and the Series
B Preferred Stock, the "Preferred Stock") and (iv) 15,000,000 shares of Common
Stock, $0.001 par value per share (the "Common Stock").
The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. Each share of Common Stock shall be
equal to each other share of Common Stock. The holders of shares of Common Stock
shall be entitled to one vote for each such share upon all questions presented
to the stockholders.
The Corporation shall be entitled to treat the person in whose
name any share of its stock is registered as the owner thereof for all purposes
and shall not be bound to recognize any equitable or other claim to, or interest
in, such share on the part of any other person, whether or not the Corporation
shall
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have notice thereof, except as expressly provided by applicable law.
The designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of the Preferred Stock are as follows:
SECTION 1. DESIGNATION AND AMOUNT.
(a) The shares of the Series A Preferred Stock shall be
designated "Series A Convertible Preferred Stock" and the number of shares
constituting such series shall be 7,500,000.
(b) The shares of the Series B Preferred Stock shall be
designated "Series B Convertible Preferred Stock" and the number of shares
constituting such series shall be 2,130,000.
(c) The shares of the Series C Preferred Stock shall be
designated "Series C Convertible Preferred Stock" and the number of shares
constituting such series shall be 1,200,000.
SECTION 2. DIVIDENDS.
(a) The holders of Series A Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors of the Corporation (the
"Board of Directors"), out of the net profits of the Corporation, dividends per
share equal to the greater of (i) 12% per annum of the Stated Value (as herein
defined) of such Series A Preferred Stock before any dividends shall be
declared, set apart for or paid upon any other stock ranking on liquidation
junior to the Series A Preferred Stock (such stock being referred to hereinafter
collectively as "Junior Stock") in any year or (ii) to the extent that a
dividend is paid on the Common Stock before any dividends are declared, set
apart for or paid upon the Series A Preferred Stock, the amount such holders
would have received had such holder converted his or its Series A Preferred
Stock into Common Stock immediately prior to the record date for such dividend.
All dividends declared upon the Series A Preferred Stock shall be declared pro
rata per share and compounded quarterly. For purposes hereof, the term "Stated
Value" shall mean $10.00 per share, subject to appropriate adjustment in the
event of any stock dividend, stock split, stock distribution or combination with
respect to the Series A Preferred Stock, the Series B Preferred Stock or the
Series C Preferred Stock, as the case may be. Dividends on the Series A
Preferred Stock shall be payable solely in additional shares of Series A
Preferred Stock. Neither the Series B Preferred Stock nor the Series C Preferred
Stock shall be entitled to receive dividends.
(b) Dividends on the Series A Preferred Stock shall be
cumulative, whether or not in any fiscal year there shall be net
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profits or surplus available for the payment of dividends in such fiscal year,
so that if in any fiscal year or years, dividends in whole or in part are not
paid upon the Series A Preferred Stock, unpaid dividends shall accumulate as
against the holders of the Junior Stock.
(c) The number of shares of Series A Preferred Stock to be
issued in payment of the dividend with respect to each outstanding share of
Series A Preferred Stock shall be determined by dividing the amount of the
dividend per share that would have been payable had such dividend been paid in
cash by the Stated Value. To the extent that any such dividend would result in
the issuance of a fractional share of Series A Preferred Stock (which shall be
determined with respect to the aggregate number of shares of Series A Preferred
Stock held of record by each holder) then the amount of such fraction multiplied
by the Stated Value shall be paid in cash (unless there are no legally available
funds with which to make such cash payment, in which event such cash payment
shall be made as soon as possible).
(d) For so long as the Series A Preferred Stock remains
outstanding, without the consent of the holders of a majority of the shares of
Series A Preferred Stock the Corporation shall not pay any dividend upon the
Junior Stock, whether in cash or other property (other than shares of Junior
Stock), or purchase, redeem or otherwise acquire any such Junior Stock unless,
in addition to the payment of the dividend to the holders of the Series A
Preferred Stock as described above, the Corporation has redeemed all shares of
Series A Preferred Stock which it would theretofore have been required to redeem
under Section 8 hereof. Notwithstanding the provisions of this Section 2(d),
without declaring or paying dividends on the Series A Preferred Stock, the
Corporation may, subject to applicable law, repurchase or redeem shares of
capital stock of the Corporation from current or former officers or employees of
the Corporation pursuant to the terms of repurchase or similar agreements in
effect from time to time, provided that such agreements have been approved by
the Board of Directors and the terms of such agreements provide for a repurchase
or redemption price not in excess of the price per share paid by such employee
for such share.
SECTION 3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) 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 then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other Preferred Stock of the Corporation ranking on liquidation
prior and in preference to the Series A Preferred Stock (such Preferred Stock
being referred to
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hereinafter as "Senior Preferred Stock"), if any, upon such liquidation,
dissolution or winding up, but before any payment shall be made to the holders
of Junior Stock, an amount in cash equal to the greater of (i) the Stated Value
per share plus any dividends thereon accrued but unpaid or (ii) assuming
conversion of the Series A Preferred Stock pursuant to Section 5, the amount
such holder would have received had such holder converted its Series A Preferred
Stock into Common Stock immediately prior to such distribution. If upon any such
liquidation, dissolution or winding up of the Corporation the remaining assets
of the Corporation available for the distribution to its stockholders after
payment in full of amounts required to be paid or distributed to holders of
Senior Preferred Stock shall be insufficient to pay the holders of shares of
Series A Preferred Stock the full amount to which they shall be entitled, the
holders of shares of Series A Preferred Stock, and any class of stock ranking on
liquidation on a parity with the Series A Preferred Stock, shall share ratably
in any distribution of the remaining assets and funds of the Corporation in
proportion to the respective amounts which would otherwise be payable in respect
to the shares held by them upon such distribution if all amounts payable on or
with respect to said shares were paid in full.
(b) The Series B Preferred Stock shall rank on liquidation on a
parity with the Series C Preferred Stock. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of shares of Series B Preferred Stock and Series C Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, after and subject to the payment
in full of all amounts required to be distributed to the holders of the Series A
Preferred Stock and any other Preferred Stock of the Corporation ranking on
liquidation prior and in preference to the Series B Preferred Stock and the
Series C Preferred Stock, upon such liquidation, dissolution or winding up, but
before any payment shall be made to the holders of any other stock ranking on
liquidation junior to the Series B Preferred Stock and the Series C Preferred
Stock, an amount in cash equal to the greater of (i) the Stated Value per share
or (ii) assuming conversion of the Series B Preferred Stock or the Series C
Preferred Stock, as the case may be, pursuant to Section 5, the amount such
holder would have received had such holder converted its Series B Preferred
Stock or Series C Preferred Stock into Common Stock immediately prior to such
distribution. If upon any such liquidation, dissolution or winding up of the
Corporation the remaining assets of the Corporation available for the
distribution to its stockholders after payment in full of amounts required to be
paid or distributed to holders of Series A Preferred Stock and Senior Preferred
Stock shall be insufficient to pay the holders of shares of Series B Preferred
Stock or the Series C Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series B Preferred Stock and the holders of
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shares of Series C Preferred Stock, and any class of stock ranking on
liquidation on a parity with the Series B Preferred Stock and the Series C
Preferred Stock, shall share ratably in any distribution of the remaining assets
and funds of the Corporation in proportion to the respective amounts which would
otherwise be payable in respect to the shares held by them upon such
distribution if all amounts payable on or with respect to said shares were paid
in full.
(c) After the payment of all preferential amounts required to be
paid to the holders of the Series A Preferred Stock, any other Senior Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and any other series
of Preferred Stock upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Common Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(d) The merger or consolidation of the Corporation into or with
another corporation, the merger or consolidation of any other corporation into
or with the Corporation, or the sale, conveyance, mortgage, pledge or lease of
all or substantially all the assets of the Corporation shall not be deemed to be
a liquidation, dissolution or winding up of the Corporation for purposes of this
Section 3.
SECTION 4. VOTING.
(a) Except as provided in Section 4(g), each issued and
outstanding share of Preferred Stock shall be entitled to the number of votes
equal to the number of shares of Common Stock into which each such share of
Preferred Stock is convertible (as adjusted from time to time pursuant to
Section 5 hereof), at each meeting of stockholders of the Corporation (or
pursuant to any action by written consent) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law, by the provisions of this Section 4 or
by the provisions establishing any other series of Preferred Stock, holders of
Preferred Stock shall vote together with the holders of Common Stock as a single
class.
(b) (i) As provided in and subject to the terms of this Section
4(b), the holders of Series A Preferred Stock shall have the exclusive right,
voting separately as a class, to elect up to three directors (herein referred to
as the "Series A Directors").
(ii) In addition to the rights of election provided in Section
4(b)(iii), so long as Warburg, Pincus Equity Partners, L.P., a Delaware
limited partnership ("Warburg") and its Affiliates beneficially own
shares of Series A Preferred Stock comprising at least fifteen percent
(15%) of
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the outstanding Common Stock (assuming conversion of all Preferred
Stock), Warburg and its Affiliates shall have the exclusive right to
elect two Series A Directors. In the event Warburg and its Affiliates
beneficially own shares of Series A Preferred Stock comprising at least
five percent (5%) but less than fifteen percent (15%) of the outstanding
Common Stock (assuming conversion of all Preferred Stock), then Warburg
and its Affiliates shall have the exclusive right to elect one Series A
Director. In the event Warburg and its Affiliates beneficially own
shares of Series A Preferred Stock comprising less than five percent
(5%) of the outstanding Common Stock (assuming conversion of all
Preferred Stock), then Warburg and its Affiliates shall have no right to
elect a Series A Director.
(iii) In addition to the rights of election provided in Section
4(b)(ii), so long as Prudential Securities Group, Inc., a Delaware
corporation ("PSGI"), and its Affiliates and Transferees own shares of
Series A Preferred Stock comprising, in the aggregate, at least five
percent (5%) of the outstanding Common Stock (assuming conversion of all
Preferred Stock), PSGI or its Affiliates or Transferees, as the case may
be, shall have the exclusive right to elect one Series A Director. In
the event PSGI and its Affiliates and Transferees beneficially own
shares of Series A Preferred Stock comprising, in the aggregate, less
than five percent (5%) of the outstanding Common Stock (assuming
conversion of all Preferred Stock), then PSGI and its Affiliates and
Transferees shall have no right to elect a Series A Director. For
purposes of this Section 4(b)(iii) "Transferees" shall mean the
transferees of Series A Preferred Stock pursuant to Section 6.9 of that
certain Securities Purchase Agreement, dated as of May 5, 2000, by and
among the Corporation, QuadraMed Corporation, QuadraMed Operating
Corporation and the investors named therein.
(iv) All Series A Directors provided pursuant to Sections
4(b)(ii) and 4(b)(iii) shall be elected by the affirmative vote of the
holders of record of a majority of the outstanding shares of Series A
Preferred Stock either at meetings of stockholders at which directors
are elected, a special meeting of holders of Series A Preferred Stock or
by written consent without a meeting in accordance with the General
Corporation Law of Delaware. Each Series A Director so elected shall
serve for a term of one year and until his successor is elected and
qualified. Any vacancy in the position of a Series A Director may be
filled only by the holders of the Series A Preferred Stock. Each Series
A Director may, during his or her term of office, be removed at any
time, with or without cause, by and only by the affirmative vote, at a
special meeting of holders of Series A Preferred Stock called for such
purpose, or the written consent, of the holders of record of a majority
of the outstanding shares of Series A Preferred Stock. Any vacancy
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created by such removal may also be filled at such meeting or by such
consent.
(c) So long as QuadraMed Operating Corporation ("QuadraMed") or
an Affiliate thereof beneficially owns shares of Series B Preferred Stock
comprising at least five percent (5%) of the outstanding Common Stock (assuming
conversion of all Preferred Stock), the holders of Series B Preferred Stock
shall have the exclusive right, voting separately as a class, to elect one
director (herein referred to as the "Series B Director"). In the event QuadraMed
and its Affiliates beneficially own shares of Series B Preferred Stock
comprising less than five percent (5%) of the outstanding Common Stock (assuming
conversion of all Preferred Stock), then QuadraMed and its Affiliates shall have
no right to elect a Series B Director. The Series B Director shall be elected by
the affirmative vote of the holders of record of a majority of the outstanding
shares of Series B Preferred Stock either at meetings of stockholders at which
directors are elected, a special meeting of holders of Series B Preferred Stock
or by written consent without a meeting in accordance with the General
Corporation Law of Delaware. The Series B Director so elected shall serve for a
term of one year and until his or her successor is elected and qualified. Any
vacancy in the position of a Series B Director may be filled only by the holders
of the Series B Preferred Stock. The Series B Director may, during his or her
term of office, be removed at any time, with or without cause, by and only by
the affirmative vote, at a special meeting of holders of Series B Preferred
Stock called for such purpose, or the written consent, of the holders of record
of a majority of the outstanding shares of Series B Preferred Stock. Any vacancy
created by such removal may also be filled at such meeting or by such consent.
(d) So long as Warburg and its Affiliates beneficially own
shares of Series A Preferred Stock comprising at least ten percent (10%) of the
outstanding Common Stock (assuming conversion of all Preferred Stock), in
addition to any other rights provided by law, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of a
majority of the outstanding shares of Series A Preferred Stock:
(i) amend or repeal any provision of the Corporation's
Certificate of Incorporation or By-Laws in a manner adversely affecting
the holders of Series A Preferred Stock;
(ii) authorize or effect the payment of dividends or the
redemption or repurchase of any capital stock of the Corporation or
rights to acquire capital stock of the Corporation (other than the
repurchase of stock from employees of the Corporation or its
subsidiaries pursuant to repurchase rights under vesting provisions
related to the length of period of employment of such employees at
purchase
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prices initially paid by such employees for such shares);
(iii) enter into any transaction, other than employment
agreements on a basis consistent with past practice, with any officer,
director or beneficial owner of five percent (5%) or more of the Common
Stock or any Affiliate of any of the foregoing;
(iv) amend, alter or repeal the preferences, special rights or
other powers of the Series A Preferred Stock so as to affect adversely
the Series A Preferred Stock. For this purpose, the authorization or
issuance of any series of Preferred Stock with preference or priority
over, or being on a parity with the Series A Preferred Stock as to the
right to receive either dividends or amounts distributable upon
liquidation, dissolution or winding up of the Corporation shall be
deemed so to affect adversely the Series A Preferred Stock;
(v) distribute money or other property in respect of any stock
other than Series A Preferred Stock; issue debt that is convertible into
stock of the Corporation; or issue stock that enjoys a priority as to
dividends or on liquidation;
(vi) authorize or effect the issuance by the Corporation of any
shares of capital stock or rights to acquire capital stock other than
(x) pursuant to options, warrants, conversion or subscription rights in
existence on the initial date of issuance of the Series A Preferred
Stock or (y) pursuant to stock option, stock bonus or other employee
stock plans for the benefit of the employees of the Corporation or its
subsidiaries in existence as of such date or thereafter approved with
the consent of the holders of a majority of the then outstanding shares
of Series A Preferred Stock;
(vii) authorize or effect (a) any sale, lease, transfer or other
disposition of all or substantially all the assets of the Corporation;
(b) any merger or consolidation or other reorganization of the
Corporation with or into another corporation, (c) the acquisition by the
Corporation of another corporation by means of a purchase of all or
substantially all of the capital stock or assets of such corporation, or
(d) a liquidation, winding up, dissolution or adoption of any plan for
the same; or
(viii) authorize or effect the election or removal of any
officer of the Corporation.
(e) So long as QuadraMed and its Affiliates beneficially own (i)
shares of Series B Preferred Stock comprising at least ten percent (10%) of the
outstanding Series B Preferred Stock and (ii) shares of Series B Preferred Stock
and
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Series C Preferred Stock comprising at least ten percent (10%) of the
outstanding Common Stock (assuming conversion of all Preferred Stock), in
addition to any other rights provided by law, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of a
majority of the outstanding shares of Series B Preferred Stock:
(i) amend or repeal any provision of the Corporation's
Certificate of Incorporation or By-Laws in a manner adversely affecting
the holders of Series B Preferred Stock;
(ii) authorize or effect the payment of dividends (other than
dividends on the Series A Preferred Stock in accordance with Section 2
hereof) or the redemption or repurchase of any capital stock of the
Corporation (other than a redemption of the Series A Preferred Stock in
accordance with Section 8 hereof) or rights to acquire capital stock of
the Corporation (other than the repurchase of stock from employees of
the Corporation or its subsidiaries pursuant to repurchase rights under
vesting provisions related to the length of period of employment of such
employees at purchase prices initially paid by such employees for such
shares);
(iii) enter into any transaction, other than employment
agreements on a basis consistent with past practice, with any officer,
director or beneficial owner of five percent (5%) or more of the Common
Stock (assuming conversion of all Preferred Stock) or any Affiliate of
any of the foregoing;
(iv) amend, alter or repeal the preferences, special rights or
other powers of the Series B Preferred Stock so as to affect adversely
the Series B Preferred Stock; or
(v) except for dividends on the Series A Preferred Stock in
accordance with Section 2 hereof, distribute money or other property in
respect of any stock other than Series B Preferred Stock.
(f) So long as QuadraMed and its Affiliates beneficially own
shares of Series C Preferred Stock comprising at least ten percent (10%) of the
outstanding Series C Preferred Stock and (ii) shares of Series B Preferred Stock
and Series C Preferred Stock comprising at least ten percent (10%) of the
outstanding Common Stock (assuming conversion of all Preferred Stock), in
addition to any other rights provided by law, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of a
majority of the outstanding shares of Series C Preferred Stock:
(i) amend or repeal any provision of the Corporation's
Certificate of Incorporation or By-Laws in a
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manner adversely affecting the holders of Series C Preferred Stock;
(ii) authorize or effect the payment of dividends (other than
dividends on the Series A Preferred Stock in accordance with Section 2
hereof) or the redemption or repurchase of any capital stock of the
Corporation (other than a redemption of the Series A Preferred Stock in
accordance with Section 8 hereof) or rights to acquire capital stock of
the Corporation (other than the repurchase of stock from employees of
the Corporation or its subsidiaries pursuant to repurchase rights under
vesting provisions related to the length of period of employment of such
employees at purchase prices initially paid by such employees for such
shares);
(iii) enter into any transaction, other than employment
agreements on a basis consistent with past practice, with any officer,
director or beneficial owner of five percent (5%) or more of the Common
Stock (assuming conversion of all Preferred Stock) or any Affiliate of
any of the foregoing;
(iv) amend, alter or repeal the preferences, special rights or
other powers of the Series C Preferred Stock so as to affect adversely
the Series C Preferred Stock; or
(v) except for dividends on the Series A Preferred Stock in
accordance with Section 2 hereof, distribute money or other property in
respect of any stock other than Series C Preferred Stock.
(g) Except as provided by law or in Section 4(f), (i) the
holders of Series C Preferred Stock shall have no voting rights and (ii) any
reference in this Section 4 to voting rights of holders of Preferred Stock, to
holders of Preferred Stock voting separately as a class, or to holders of
Preferred Stock voting together with the holders of Common Stock as a single
class shall be construed as excluding the holders of the shares of Series C
Preferred Stock from any such vote.
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SECTION 5. OPTIONAL CONVERSION. Each share of Preferred Stock
may be converted at any time, at the option of the holder thereof, into the
number of fully-paid and nonassessable shares of Common Stock obtained by
dividing the Stated Value by the Conversion Price then in effect (the
"Conversion Rate"), provided, however, that on any redemption of any Preferred
Stock or any liquidation of the Corporation, the right of conversion shall
terminate at the close of business on the full business day next preceding the
date fixed for such redemption or for the payment of any amounts distributable
on liquidation to the holders of such Preferred Stock.
(a) The initial conversion price, subject to adjustment as
provided herein, is equal to $10.00 (the "Conversion Price"). The initial
Conversion Rate for the Preferred Stock shall be one share of Common Stock for
each one share of Preferred Stock surrendered for conversion. The applicable
Conversion Rate and Conversion Price from time to time in effect is subject to
adjustment as hereinafter provided.
(b) The Corporation shall not issue fractions of shares of
Common Stock upon conversion of Preferred Stock or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 5(b), be issuable upon conversion of Preferred Stock, the Corporation
shall in lieu thereof pay to the person entitled thereto an amount in cash equal
to the current value of such fraction, calculated to the nearest one-hundredth
(1/100) of a share, to be computed (i) if the Common Stock is listed on any
national securities exchange, on the basis of the last sales price of the Common
Stock on such exchange (or the quoted closing bid price if there shall have been
no sales) on the date of conversion, or (ii) if the Common Stock shall not be
listed, on the basis of the mean between the closing bid and asked prices for
the Common Stock on the date of conversion as reported by NASDAQ, or its
successor, and if there are not such closing bid and asked prices, on the basis
of the fair market value per share as determined by the Board of Directors.
(c) Whenever the Conversion Rate and Conversion Price shall be
adjusted as provided in Section 6 hereof, the Corporation shall forthwith file
at each office designated for the conversion of Preferred Stock, a statement,
signed by the Chairman of the Board, the President, any Vice President or
Treasurer of the Corporation, showing in reasonable detail the facts requiring
such adjustment and the Conversion Rate that will be effective after such
adjustment. The Corporation shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to each record
holder of Preferred Stock at his or its address appearing on the stock register.
If such notice relates to an adjustment resulting from an event referred to in
Section 6(g) hereof, such notice shall be
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included as part of the notice required to be mailed and published under the
provisions of Section 6(g) hereof.
(d) In order to exercise the conversion privilege, the holder of
Preferred Stock to be converted shall surrender his or its certificate or
certificates therefore to the principal office of the transfer agent for the
Preferred Stock (or if no transfer agent be at the time appointed, then the
Corporation at its principal office), and shall give written notice to the
Corporation at such office that the holder elects to convert the Preferred Stock
represented by such certificates, or any number thereof. Such notice shall also
state the name or names (with address) in which the certificate or certificates
for shares of Common Stock which shall be issuable on such conversion shall be
issued, subject to any restrictions on transfer relating to shares of the
Preferred Stock or shares of Common Stock upon conversion thereof. 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 authorized in writing. The date of
receipt by the transfer agent (or by the Corporation if the Corporation serves
as its own transfer agent) of the certificates and notice shall be the
conversion date. As soon as practicable after receipt of such notice and the
surrender of the certificate or certificates for Preferred Stock as aforesaid,
the Corporation shall cause to be issued and delivered at such office 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, cash as provided in Section 5(b) hereof in respect
of any fraction of a share of Common Stock otherwise issuable upon such
conversion and, if less than all shares of Preferred Stock represented by the
certificate or certificates so surrendered are being converted, a residual
certificate or certificates representing the shares of Preferred Stock not
converted.
(e) 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 purposes 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 that would cause an adjustment reducing the
Conversion Price below the then par value of the shares of Common Stock issuable
upon conversion of the Preferred Stock, the Corporation will take any corporate
action that 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
such Common Stock at such adjusted conversion price.
(f) 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
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such shares, including the rights, if any, to receive notices and to vote, shall
forthwith cease and terminate except only the right of the holder thereof to
receive shares of Common Stock in exchange therefor and, with respect to shares
of Preferred Stock that surrendered for conversion, payment of any accrued and
unpaid dividends thereon. Any shares of Preferred Stock so converted shall be
retired and canceled and shall not be reissued, and the Corporation may from
time to time take such appropriate action as may be necessary to reduce the
authorized Preferred Stock accordingly.
SECTION 6. ANTI-DILUTION PROVISIONS.
(a) In order to prevent dilution of the right granted hereunder,
the Conversion Price shall be subject to adjustment from time to time in
accordance with this Section 6(a). For purposes of this Section 6, the term
"Number of Common Shares Deemed Outstanding" at any given time shall mean the
sum of (x) the number of shares of Common Stock outstanding at such time, (y)
the number of shares of Common Stock issuable assuming conversion at such time
of the Preferred Stock and (z) the number of shares of the Common Stock deemed
to be outstanding under paragraphs 6(b)(1) to (9), inclusive, at such time.
(b) Except as provided in Section 6(c) or 6(f) hereof, if and
whenever on or after the date of initial issuance of the Series A Preferred
Stock (the "Initial Issuance Date"), the Corporation shall issue or sell, or
shall in accordance with paragraphs 6(b)(1) to (9), inclusive, be deemed to have
issued or sold any shares of its Common Stock for a consideration per share less
than the Conversion Price in effect immediately prior to the time of such issue
or sale, then forthwith upon such issue or sale (the "Triggering Transaction"),
the Conversion Price shall, subject to paragraphs (1) to (9) of this Section
6(b), be reduced to the Conversion Price (calculated to the nearest tenth of a
cent) determined by dividing:
(i) an amount equal to the sum of (x) the product derived by
multiplying the Number of Common Shares Deemed Outstanding immediately
prior to such Triggering Transaction by the Conversion Price then in
effect, plus (y) the consideration, if any, received by the Corporation
upon consummation of such Triggering Transaction, by
(ii) an amount equal to the sum of (x) the Number of Common
Shares Deemed Outstanding immediately prior to such Triggering
Transaction plus (y) the number of shares of Common Stock issued (or
deemed to be issued in accordance with paragraphs 6(b)(1) to (9)) in
connection with the Triggering Transaction.
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For purposes of determining the adjusted Conversion Price under
this Section 6(b), the following paragraphs (1) to (9), inclusive, shall be
applicable:
(1) In case the Corporation at any time shall in any manner
grant (whether directly or by assumption in a merger or otherwise) any
rights to subscribe for or to purchase, or any options for the purchase
of, Common Stock or any stock or other securities convertible into or
exchangeable for Common Stock (such rights or options being herein
called "Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not
such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable and the price per share for which
the Common Stock is issuable upon exercise, conversion or exchange
(determined by dividing (x) the total amount, if any, received or
receivable by the Corporation as consideration for the granting of such
Options, plus the minimum aggregate amount of additional consideration
payable to the Corporation upon the exercise of all such Options, plus,
in the case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities) shall be less
than the Conversion Price in effect immediately prior to the time of the
granting of such Option, then the total maximum amount of Common Stock
issuable upon the exercise of such Options or in the case of Options for
Convertible Securities, upon the conversion or exchange of such
Convertible Securities shall (as of the date of granting of such
Options) be deemed to be outstanding and to have been issued and sold by
the Corporation for such price per share. No adjustment of the
Conversion Price shall be made upon the actual issue of such shares of
Common Stock or such Convertible Securities upon the exercise of such
Options, except as otherwise provided in paragraph (3) below.
(2) In case the Corporation at any time shall in any manner
issue (whether directly or by assumption in a merger or otherwise) or
sell any Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (x) the total amount received or
receivable by the Corporation as consideration for the issue or sale of
such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (y) the total maximum number of
shares of Common
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<PAGE> 16
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall (as of the date of the
issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued and sold by the Corporation for such
price per share. No adjustment of the Conversion Price shall be made
upon the actual issue of such Common Stock upon exercise of the rights
to exchange or convert under such Convertible Securities, except as
otherwise provided in paragraph (3) below.
(3) If the purchase price provided for in any Options referred
to in paragraph (1), the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to in
paragraphs (1) or (2), or the rate at which any Convertible Securities
referred to in paragraphs (1) or (2) are convertible into or
exchangeable for Common Stock shall change at any time (other than under
or by reason of provisions designed to protect against dilution of the
type set forth in Sections 6(b) or 6(d)), the Conversion Price in effect
at the time of such change shall forthwith be readjusted to the
Conversion Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold. If the
purchase price provided for in any Option referred to in paragraph (1)
or the rate at which any Convertible Securities referred to in
paragraphs (1) or (2) are convertible into or exchangeable for Common
Stock, shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution, then in case
of the delivery of Common Stock upon the exercise of any such Option or
upon conversion or exchange of any such Convertible Security, the
Conversion Price then in effect hereunder shall forthwith be adjusted to
such respective amount as would have been obtained had such Option or
Convertible Security never been issued as to such Common Stock and had
adjustments been made upon the issuance of the shares of Common Stock
delivered as aforesaid, but only if as a result of such adjustment the
Conversion Price then in effect hereunder is hereby reduced.
(4) On the expiration of any Option or the termination of any
right to convert or exchange any Convertible Securities, the Conversion
Price then in effect hereunder shall forthwith be increased to the
Conversion Price which would have been in effect at the time of such
expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or
termination, never been issued.
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(5) In case any Options shall be issued in connection with the
issue or sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall
be deemed to have been issued without consideration.
(6) In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold or deemed to have been issued or sold
for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor. In case any shares of
Common Stock, Options or Convertible Securities shall be issued or sold
for a consideration other than cash, the amount of the consideration
other than cash received by the Corporation shall be the fair value of
such consideration as determined in good faith by the Board of
Directors. In case any shares of Common Stock, Options or Convertible
Securities shall be issued in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration
therefor shall be deemed to be the fair value of such portion of the net
assets and business of the non-surviving corporation as shall be
attributable to such Common Stock, Options or Convertible Securities, as
the case may be.
(7) The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account
of the Corporation, and the disposition of any shares so owned or held
shall be considered an issue or sale of Common Stock for the purpose of
this Section 6(b).
(8) In case the Corporation shall declare a dividend or make any
other distribution upon the stock of the Corporation payable in Options
or Convertible Securities, then in such case any Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
(9) For purposes of this Section 6(b), in case the Corporation
shall take a record of the holders of its Common Stock for the purpose
of entitling them (x) to receive a dividend or other distribution
payable in Common Stock, Options or in Convertible Securities, or (y) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued
or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right or
subscription or purchase, as the case may be.
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(c) In the event the Corporation shall declare a dividend upon
the Common Stock (other than a dividend payable in Common Stock) payable
otherwise than out of earnings or earned surplus, determined in accordance with
generally accepted accounting principles, including the making of appropriate
deductions for minority interests, if any, in subsidiaries (herein referred to
as "Liquidating Dividends"), then, as soon as possible after the conversion of
any shares of Preferred Stock, the Corporation shall pay to the person
converting such shares of Preferred Stock an amount equal to the aggregate value
at the time of such exercise of all Liquidating Dividends (including but not
limited to the Common Stock which would have been issued at the time of such
earlier exercise and all other securities which would have been issued with
respect to such Common Stock by reason of stock splits, stock dividends, mergers
or reorganizations, or for any other reason). For the purposes of this Section
6(c), a dividend other than in cash shall be considered payable out of earnings
or earned surplus only to the extent that such earnings or earned surplus are
charged an amount equal to the fair value of such dividend as determined in good
faith by the Board of Directors.
(d) In case the Corporation shall at any time (i) subdivide the
outstanding Common Stock or (ii) issue a dividend on its outstanding Common
Stock payable in shares of Common Stock, the number of shares of Common Stock
issuable upon conversion of the Preferred Stock shall be proportionately
increased by the same ratio as the subdivision or dividend (with appropriate
adjustments to the Conversion Price in effect immediately prior to such
subdivision or dividend). In case the Corporation shall at any time combine its
outstanding Common Stock, the number of shares issuable upon conversion of the
Preferred Stock immediately prior to such combination shall be proportionately
decreased by the same ratio as the combination (with appropriate adjustments to
the Conversion Price in effect immediately prior to such combination).
(e) If any capital reorganization or reclassification of the
capital stock of the Corporation, or consolidation or merger of the Corporation
with another corporation, or the sale of all or substantially all of its assets
to another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash or other property
with respect to or in exchange for Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, lawful and
adequate provision shall be made whereby the holders of the Preferred Stock
shall have the right to acquire and receive upon conversion of the Preferred
Stock, which right shall be, in the case of any series of Preferred Stock, prior
to the rights of the holders of any other stock of the Corporation ranking on
liquidation junior to such series (but after and subject to the rights of
holders of any Preferred Stock of the Corporation ranking on liquidation prior
and in preference to such series, if any), such shares of
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<PAGE> 19
stock, securities, cash or other property issuable or payable (as part of the
reorganization, reclassification, consolidation, merger or sale) with respect to
or in exchange for such number of outstanding shares of Common Stock as would
have been received upon conversion of the Preferred Stock at the Conversion
Price then in effect. The Corporation will not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument mailed or delivered to the holders of the Preferred Stock at the last
address of each such holder appearing on the books of the Corporation, the
obligation to deliver to each such holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holder may be
entitled to purchase. If a purchase, tender or exchange offer is made to and
accepted by the holders of more than 50% of the outstanding shares of Common
Stock, the Corporation shall not effect any consolidation, merger or sale with
the person having made such offer or with any Affiliate of such person, unless
prior to the consummation of such consolidation, merger or sale the holders of
the Preferred Stock shall have been given a reasonable opportunity to then elect
to receive upon conversion of the Preferred Stock either the stock, securities
or assets then issuable with respect to the Common Stock or the stock,
securities or assets, or the equivalent, issued to previous holders of the
Common Stock in accordance with such offer. For purposes hereof, the term
"Affiliate" with respect to any given person shall mean any person controlling,
controlled by or under common control with the given person.
(f) The provisions of this Section 6 shall not apply to any
Common Stock issued, issuable or deemed outstanding under paragraphs 6(b)(1) to
(9) inclusive: (i) to any person pursuant to any stock option, stock purchase or
similar plan or arrangement for the benefit of employees of the Corporation or
its subsidiaries in effect on the Initial Issuance Date or thereafter adopted by
the Board of Directors and a majority of the Series A Directors, (ii) pursuant
to options, warrants and conversion rights in existence on the Initial Issuance
Date, or (iii) on conversion of the Preferred Stock or the sale of any
additional shares of Preferred Stock.
(g) In the event that:
(1) the Corporation shall declare any cash dividend upon its
Common Stock, or
(2) the Corporation shall declare any dividend upon its Common
Stock payable in stock or make any special dividend or other
distribution to the holders of its Common Stock, or
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<PAGE> 20
(3) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class
or other rights, or
(4) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, including any
subdivision or combination of its outstanding shares of Common Stock, or
consolidation or merger of the Corporation with, or sale of all or
substantially all of its assets to, another corporation, or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the holders
of the Preferred Stock:
(i) at least twenty (20) days prior written notice of the
date on which the books of the Corporation shall close
or a record shall be taken for such dividend,
distribution or subscription rights or for determining
rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, at least twenty
(20) days prior written notice of the date when the same
shall take place. Such notice in accordance with the
foregoing clause (i) shall also specify, in the case of
any such dividend, distribution or subscription rights,
the date on which the holders of Common Stock shall be
entitled thereto, and such notice in accordance with the
foregoing clause (ii) shall also specify the date on
which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other
property deliverable upon such reorganization,
reclassification consolidation, merger, sale,
dissolution, liquidation or winding up, as the case may
be. Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of
the Preferred Stock at the address of each such holder
as shown on the books of the Corporation.
(h) If at any time or from time to time on or after the Initial
Issuance Date, the Corporation shall grant, issue or sell any Options,
Convertible Securities or rights to purchase property (the "Purchase Rights")
pro rata to the record holders of any class of Common Stock and such grants,
issuances or sales
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do not result in an adjustment of the Conversion Price under Section 6(b)
hereof, then each holder of Preferred Stock shall be entitled to acquire (within
thirty (30) days after the later to occur of the initial exercise date of such
Purchase Rights or receipt by such holder of the notice concerning Purchase
Rights to which such holder shall be entitled under Section 6(g)) and upon the
terms applicable to such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could
have acquired if it had held the number of shares of
Common Stock acquirable upon conversion of the Preferred
Stock immediately before the grant, issuance or sale of
such Purchase Rights; provided that if any Purchase
Rights were distributed to holders of Common Stock
without the payment of additional consideration by such
holders, corresponding Purchase Rights shall be
distributed to the exercising holders of the Preferred
Stock as soon as possible after such exercise and it
shall not be necessary for the exercising holder of the
Preferred Stock specifically to request delivery of such
rights; or
(ii) in the event that any such Purchase Rights shall have
expired or shall expire prior to the end of said thirty
(30) day period, the number of shares of Common Stock or
the amount of property which such holder could have
acquired upon such exercise at the time or times at
which the Corporation granted, issued or sold such
expired Purchase Rights.
(i) If any event occurs as to which, in the opinion of the Board
of Directors, the provisions of this Section 6 are not strictly applicable or if
strictly applicable would not fairly protect the rights of the holders of the
Preferred Stock in accordance with the essential intent and principles of such
provisions, then the Board of Directors shall make an adjustment in the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such rights as aforesaid, but in no event shall any
adjustment have the effect of increasing the Conversion Price as otherwise
determined pursuant to any of the provisions of this Section 6 except in the
case of a combination of shares of a type contemplated in Section 6(d) hereof
and then in no event to an amount larger than the Conversion Price as adjusted
pursuant to Section 6(d) hereof.
SECTION 7. MANDATORY CONVERSION.
(a) Each share of Preferred Stock shall automatically be
converted into shares of Common Stock at its then effective Conversion Price at
any time upon the closing of an underwritten
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public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the Corporation to the public generally at a price to the
public which places upon the Corporation a value (prior to the receipt of
proceeds of such offering) of at least $50 million and in which the net proceeds
to the Corporation are not less than $10 million (herein referred to as a
"Qualified Public Offering"). In addition, each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Conversion Price for such shares upon the vote to so convert of the holders of
at least a majority of the shares of Preferred Stock then outstanding.
(b) All holders of record of shares of Preferred Stock will be
given at least 10 days' prior written notice of the date fixed and the place
designated for mandatory conversion of all of such shares of Preferred Stock
pursuant to this Section 7. Such notice will be sent by mail, first class,
postage prepaid, to each record holder of shares of Preferred Stock at such
holder's address appearing on the stock register. On or before the date fixed
for conversion each holder of shares of Preferred Stock shall surrender his or
its certificates 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 7. On the date fixed for conversion, all rights with respect to
the Preferred Stock so converted will terminate, except only the rights of the
holders thereof, upon surrender of their certificate or certificates therefor,
to receive certificates for the number of shares of Common Stock into which such
Preferred Stock has been converted. If so 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 attorneys duly
authorized in writing. All certificates evidencing shares of Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and canceled and the
shares of Preferred Stock represented thereby converted into Common Stock for
all purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. As soon as practicable
after the date of such mandatory conversion and the surrender of the certificate
or certificates for Preferred Stock as aforesaid, 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 Section 5(b) hereof in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
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SECTION 8. REDEMPTION.
(a) The Corporation shall redeem all outstanding shares of
Series A Preferred Stock (to the extent that such redemption shall not violate
any applicable provisions of the laws of the State of Delaware) on the fifth
anniversary of the Initial Issuance Date (the "Redemption Date"). Each share of
Series A Preferred Stock shall be redeemed at a price in cash equal to the
Stated Value per share, plus an amount equal to any dividends accrued but unpaid
thereon (such amount is hereinafter referred to as the "Redemption Price"). If
the Corporation is unable to redeem any shares of Series A Preferred Stock then
to be redeemed because such redemption would violate the applicable laws of the
State of Delaware, then the Corporation shall redeem such shares as soon
thereafter as redemption would not violate such laws.
(b) In the event of any redemption of only a part of the then
outstanding Series A Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders of Series A Preferred Stock (based on the
number of shares of Series A Preferred Stock held on the Redemption Date).
(c) At least thirty (30) days prior to the Redemption Date,
written notice shall be mailed, postage prepaid, to each holder of record of
Series A Preferred Stock to be redeemed, at his or its post office address last
shown on the records of the Corporation, notifying such holder of the number of
shares so to be redeemed, specifying the Redemption Date and the date on which
such holder's conversion rights (pursuant to Section 5 hereof) as to such shares
terminate and calling upon such holder to surrender to the Corporation, in the
manner and at the place designated, his or its certificate or certificates
representing the shares to be redeemed (such notice is hereinafter referred to
as the "Redemption Notice"). On or prior to the Redemption Date, each holder of
Series A Preferred Stock to be redeemed shall surrender his or its certificate
or certificates representing such shares to the Corporation, in the manner and
at the place designated in the Redemption Notice, and thereupon the Redemption
Price of 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. In the event less than all the shares
represented by any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares. From and after the Redemption Date,
unless there shall have been a default in payment of the Redemption Price, all
rights of the holders of the Series A Preferred Stock designated for redemption
in the Redemption Notice as holders of Series A Preferred Stock (except the
right to receive the Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be
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<PAGE> 24
outstanding for any purpose whatsoever.
(d) Except for the right to redeem shares of Series A Preferred
Stock as provided in Section 8(a) hereof, the Corporation shall have no right to
redeem the shares of Preferred Stock. Any shares of Series A Preferred Stock so
redeemed shall be permanently retired, shall no longer be deemed outstanding and
shall not under any circumstances be reissued, and the Corporation may from time
to time take such appropriate corporate action as may be necessary to reduce the
authorized Preferred Stock accordingly. Subject to Section 4 hereof, nothing
herein contained shall prevent or restrict the purchase by the Corporation, from
time to time either at public or private sale, of the whole or any part of the
Preferred Stock at such price or prices as the Corporation may determine,
subject to the provisions of applicable law.
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<PAGE> 25
ARTICLE V.
In furtherance and not in limitation of the powers conferred by
statute, the by-laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by a majority of the entire Board of Directors.
ARTICLE VI.
Elections of directors need not be by written ballot.
ARTICLE VII.
1. Indemnification. The Corporation shall indemnify to the
fullest extent permitted under and in accordance with the laws of the State of
Delaware any person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, incorporator, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, trustee,
employee or agent of or in any other similar capacity with another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, shall not, of itself, create a presumption that
the person had reasonable cause to believe that his conduct was unlawful.
2. Payment of Expenses. Expenses (including attorneys' fees)
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall (in the case of any action, suit or proceeding
against a director of the Corporation) or may (in the case of any action, suit
or proceeding against an officer, trustee, employee or agent) be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the
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<PAGE> 26
indemnified person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article VII.
3. Nonexclusivity of Provision. The indemnification and other
rights set forth in this Article shall not be exclusive of any provisions with
respect thereto in the by-laws or any other contract or agreement between the
Corporation and any officer, director, employee or agent of the Corporation.
4. Effect of Repeal. Neither the amendment nor repeal of this
Article VII, subparagraph 1, 2, or 3, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with Article VII, subparagraph 1, 2,
or 3, shall eliminate or reduce the effect of this Article VII, subparagraphs 1,
2, and 3, in respect of any matter occurring before such amendment, repeal or
adoption of an inconsistent provision or in respect of any cause of action, suit
or claim relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this Article VII,
subparagraph 1, 2, or 3, if such provision had not been so amended or repealed
or if a provision inconsistent therewith had not been so adopted.
5. Limitation on Liability. No director or officer shall be
personally liable to the Corporation or any stockholder for monetary damages for
breach of fiduciary duty as a director or officer, except for any matter in
respect of which such director or officer (A) shall be liable under Section 174
of the General Corporation Law of the State of Delaware or any amendment thereto
or successor provision thereto, or (B) shall be liable by reason that, in
addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation
or its stockholders;
(ii) shall not have acted in good faith or, in failing to act,
shall not have acted in good faith;
(iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act,
shall have acted in a manner involving intentional misconduct or
a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is
amended after the date hereof to authorize corporate action further eliminating
or limiting 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.
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IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by its President this first day of June 2000.
-----------------------------
Ivar Chhina
President
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