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Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ATHERSYS, INC.
Athersys, Inc., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the corporation is Athersys, Inc. The date of filing of its
original Certificate of Incorporation with the Secretary of State of the State
of Delaware was October 24, 1995.
2. This Amended and Restated Certificate of Incorporation was duly adopted
by vote of the stockholders of Athersys, Inc. in accordance with Sections 242
and 245 of the General Corporation Law of the State of Delaware.
3. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Amended and Restated Certificate of
Incorporation of Athersys, Inc. to read in its entirety as follows:
FIRST: The name of the Corporation is Athersys, Inc.
SECOND: 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.
THIRD: The nature of the business or purposes to be conducted or promoted
is: To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH:
A. General Authorization. The aggregate number of shares of capital
stock which the Corporation is authorized to issue is Thirty-Seven Million
Four Hundred Ninety-Two Thousand Three Hundred Fifty (37,492,350) shares,
consisting of:
1. Twenty-Four Million Sixty Thousand (24,060,000) shares of
common stock having a par value of $.01 per share ("Common Stock").
2. Three Million Nine Hundred Thirty- Nine Thousand (3,939,000)
shares of Class A Convertible Preferred Stock having a par value of
$.01 per share ("Class A Preferred");
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3. Three Hundred Nineteen Thousand Eight Hundred (319,800) shares
of Class B Convertible Preferred Stock having a par value of $.01 per
share ("Class B Preferred");
4. Four Million One Hundred Sixteen Thousand (4,116,000) shares
of Class C Convertible Preferred Stock having a par value of $.01 per
share ("Class C Preferred");
5. One Hundred Fifty Thousand (150,000) shares of Class D
Convertible Preferred Stock having a par value of $.01 per share
("Class D Preferred");
6. Eighteen Thousand One Hundred (18,100) shares of Class E
Convertible Preferred Stock having a par value of $.01 per share
("Class E Preferred");
7. Four Million (4,000,000) shares of Class F Convertible
Preferred Stock having a par value of $.01 per share ("Class F
Preferred");
8. Six Hundred Thirty-Nine Thousand Four Hundred Fifty (639,450)
shares of Class G Preferred Stock having a par value of $.01 per share
("Class G Preferred"); and
9. Two Hundred Fifty Thousand (250,000) shares of preferred stock
having a par value of $.01 per share ("Blank Check Preferred").
B. TERMS OF COMMON STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions of the Common Stock.
COMMON STOCK
1. Generally. All preferences, voting powers, relative, participating,
optional or other special rights and privileges, and qualifications,
limitations, or restrictions of the Common Stock are expressly made subject and
subordinate to those that may be fixed with respect to the Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E Preferred,
Class F Preferred, Class G Preferred and Blank Check Preferred (collectively,
the "Preferred Stock").
2. Voting Rights. Except as otherwise required by law or as set forth in
this Certificate of Incorporation, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held by him or it of record on the
books of the Corporation for the election of directors and on all matters
submitted to a vote of stockholders of the Corporation. Except as otherwise
required by law or as set forth in this Certificate of Incorporation, the
holders of shares of Common Stock and shares of the Class A Preferred, Class B
Preferred, Class C Preferred, Class D Preferred, Class F Preferred, Class G
Preferred and Blank Check Preferred (collectively, "Group I Preferred Stock"),
voting on an As Converted Basis (as defined, with
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respect to each of such classes of Group I Preferred Stock, in Section 1(a) of
the terms of such class of Group I Preferred Stock), shall vote together as a
single class on all matters submitted to the stockholders for a vote.
3. Dividends. The holders of outstanding Common Stock shall be entitled to
receive dividends when, as and if declared by the Board of Directors from funds
legally available therefor; provided, that such dividend rights shall be junior
to the dividend rights of the holders of outstanding shares of the Preferred
Stock.
4. Dissolution, Liquidation or Winding Up. In the event of any dissolution,
liquidation or winding up of the affairs of the Corporation, after distribution
in full of the preferential amounts to be distributed to the holders of shares
of the outstanding Preferred Stock, the holders of outstanding shares of Common
Stock shall be entitled to receive all of the remaining assets of the
Corporation of whatever kind available for distribution to stockholders ratably
in proportion to the number of shares of Common Stock held by them,
respectively, unless otherwise provided by law or as set forth in this
Certificate of Incorporation.
C. TERMS OF CLASS A CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions of the Class A Preferred.
Except as expressly provided in this Section C of this Article Fourth ("Section
C"), references to "Sections" in this Section C shall be references to Sections
within this Section C.
CLASS A CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class A Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class A Preferred shall be entitled to cast the number of
votes which he or it would have had the right to cast had all of its or his
Class A Preferred been converted, as provided in Section 4, into Common
Stock ("As Converted Basis") as of the record date of the meeting at which
such votes are to be cast or as of the date any written consent is taken,
including any fraction of a share of Common Stock into which a holder's
Class A Preferred would be convertible. Holders of Class A Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class A Preferred shall be entitled to notice
of all meetings or actions of stockholders.
(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class A Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of seventy-five percent (75%) of the then outstanding Class
A Preferred, Class B Preferred, Class D Preferred, Class G Preferred and
Blank Check Preferred (collectively, the "Convertible Preferred Shares"),
voting as a single class on an As Converted Basis and such further
affirmative vote, if any, of the holders of any class of preferred shares
as may be otherwise required by the laws of the State of Delaware or this
Amended and Restated Certificate of Incorporation:
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(i) amend this Amended and Restated Certificate of Incorporation or
the By-laws of the Corporation in any manner that would or could prejudice
the rights of the holders of the Convertible Preferred Shares, including
any such amendment (or similar effect which would occur by virtue of the
merger or consolidation of the Corporation) that does any of the following:
(A) increases or decreases the par value of the issued
Convertible Preferred Shares;
(B) changes issued Convertible Preferred Shares into a lesser
number of shares of the same class or into the same or a different
number of shares of any other class, with or without par value,
theretofore or then authorized;
(C) changes the terms, or adds terms, of the Convertible
Preferred Shares in any manner prejudicial to the holders of such
shares;
(D) changes the terms of issued shares of any class senior,
junior or pari passu to the Convertible Preferred Shares in any manner
prejudicial to the holders of Convertible Preferred Shares;
(E) authorizes shares of another class that are convertible into,
or authorizes the conversion of shares of another class into,
Convertible Preferred Shares or authorizes the Board of Directors to
fix or alter conversion rights of shares of another class that are
convertible into Convertible Preferred Shares;
(F) provides, in the case of an amendment described in Section
1(b)(i)(A) or (B), that the stated capital of the Corporation shall be
reduced or eliminated as a result of the amendment, or provides, in
the case of Section 1(b)(i)(E), that the stated capital of the
Corporation shall be reduced or eliminated upon the exercise of such
conversion rights; provided that any such reduction or elimination is
consistent with Section 244 of the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation, or
provides that thereafter an amendment to this Certificate of
Incorporation may be adopted that changes substantially the purposes
of the Corporation; or
(H) changes the Corporation into a nonprofit corporation.
(ii) authorize, issue or sell or obligate itself to authorize, issue
or sell any class of its capital stock or other securities (including debt
securities) convertible into or exercisable for any equity security which
ranks senior or pari passu in right, either as to voting, dividends or upon
liquidation, with the Convertible Preferred Shares.
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(c) Notwithstanding anything herein to the contrary contained in
Section 1(a) or (b), so long as any Group I Preferred Stock remains
outstanding, the Corporation shall not, without the affirmative vote by the
holders of at least seventy-five percent (75%) of the then outstanding
Group I Preferred Stock on an As Converted Basis, effect (i) any sale,
lease, assignment, transfer or other conveyance of all or substantially all
of the assets or capital stock of the Corporation, (ii) any
recapitalization, reclassification, reorganization or any similar
transaction with respect to any of its shares of capital stock, (iii) any
consolidation or merger involving the Corporation; or (iv) effect any
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class A Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable when and if declared
by the Board of Directors of the Corporation out of funds legally available
therefor annually, prior and in preference to any declaration or payment of
any dividend on the Common Stock, in arrears on the first day of January of
each year. The dividends provided for in this Section 2(a) shall not be
cumulative.
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class A Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock;
provided, that for the purposes of determining the amount of any such
dividend payable to the holders of Class A Preferred, such holders shall be
entitled to receive a proportionate amount of such dividends as if all
issued and outstanding Class A Preferred had been converted into Common
Stock as of the record date for the determination of holders entitled to
receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and Common Stock will be entitled to receive
from the Corporation's assets available for distribution to stockholders,
the amounts and preferences as set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or distribution shall be made to the holders of Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E
Preferred, Class G Preferred, Blank Check Preferred or Common Stock or
shares of any class of capital stock of the Corporation;
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(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
dividends on such shares; the holders of Class D Preferred shall
receive cash in the amount of One and 35/100 Dollars ($1.35) per
share, plus an amount equal to declared but unpaid dividends on such
shares; the holders of Class E Preferred shall receive cash in the
amount of One Thousand Dollars ($1,000) per share (the "Class E
Liquidation Preference Amount"); provided, however, that except as
provided in the next proviso, the aggregate amount payable to the
holders of Class E Preferred pursuant to this Section 3(a)(ii) shall
not exceed Five Million Dollars ($5,000,000); provided, further, that
if the holders of Class E Preferred shall have purchased additional
shares of Common Stock pursuant to the terms of Section 1(h) of that
certain Securities Purchase Agreement, dated as of October 21, 1999,
by and among the Corporation, Elan International Services, Ltd. and
Elan Corporation plc (the "Purchase Agreement"), the aggregate amount
set forth in the immediately preceding proviso shall be increased by
the aggregate amount actually paid for such Common Stock; the holders
of Class G Preferred shall receive cash in the amount of One and
85/100 Dollars ($1.85) per share, plus an amount equal to declared but
unpaid dividends on such shares; and the holders of Blank Check
Preferred shall receive the liquidation preference which is set forth
in the Certificate of Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount
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payable to the holders of the Common Stock pursuant to this Section
3(a)(v) exceed One Million One Hundred Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i)-(vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay
the amounts payable under Section 3(a)(i) to the holders of all the
outstanding Class F Preferred, the holders of Class F Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, in the event
that the holders of the Class F Preferred shall have been paid all amounts
payable under Section 3(a)(i) but the Corporation has insufficient funds to
pay the amounts payable under Section 3(a)(ii) to the holders of all the
outstanding Class C Preferred, the holders of Class C Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, if, upon any
such event, the Corporation has insufficient funds to pay the amounts
payable under Section 3(a)(iii) to the holders of all the outstanding Class
A Preferred, Class B Preferred, Class D Preferred, Class E Preferred, Class
G Preferred and Blank Check Preferred (collectively, the "Group II
Preferred Stock"), the holders of such Group II Preferred Stock shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. "Founders" shall mean
Gil Van Bokkelen, John J. Harrington, Huntington Willard, James Nelson, Ira
Mellman and Robert W. Mays.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Corporation, nor the consolidation or
merger of the Corporation with or into any other corporation or
corporations, nor the consolidation or merger of any other corporation or
corporations with or into the Corporation, nor the reorganization of the
Corporation, shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3 if the
holders of at least fifty-one percent (51%) of the then outstanding
Convertible Preferred Shares and Class F Preferred together elect to have
such events not deemed a liquidation of the Corporation by giving written
notice to the Corporation.
(c) After the payment in cash to the holders of Class A Preferred of
the full preferential amount fixed in accordance with the provisions of
Section 3(a) with respect
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to the outstanding Class A Preferred, the holders of outstanding Class A
Preferred as such will have no right or claim to any of the remaining
assets of the Corporation.
(d) In the event (i) the holders of the Class A Preferred vote to
convert their shares of Class A Preferred into Common Stock immediately
prior to or in connection with an event specified in Section 3(a) or (ii)
any holder of Class A Preferred otherwise converts their shares of Class A
Preferred into Common Stock in accordance with such holder's rights under
Section 4, the priorities and preferences set forth in Section 3(a) shall
be of no further effect and the holders of such Common Stock shall share
all of the assets of the Corporation available for distribution to all
holders of Common Stock ratably in proportion to the number of Common Stock
held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class A Preferred
shall, subject to the terms and conditions hereinafter set forth, convert
such Class A Preferred into fully paid and nonassessable shares of Common
Stock at the Conversion Price (as defined in Section 4(b)) in effect on the
Conversion Date (as defined in Section 4(c)), at the following times and
pursuant to the following conditions: (i) at any time, at such
stockholder's option; (ii) automatically and simultaneously upon the
Closing of a Public Offering (as defined in this Section 4(a)); or (iii)
upon the written notice to the Corporation at the election by the holders
of seventy-five percent (75%) of the outstanding Class A Preferred, voting
on an As Converted Basis. The Closing of a Public Offering shall mean the
consummation (the "Closing") of the sale by the Corporation of Common Stock
pursuant to an effective registration statement under the Securities Act of
1933, as amended; provided, that such sale yields gross proceeds of not
less than Fifteen Million Dollars ($15,000,000) at a price of not less than
Five Dollars ($5.00) per share and is made pursuant to a firm commitment
underwriting which is based upon a pre- money valuation of no less than
Sixty Million Dollars ($60,000,000) (a "Public Offering").
(b) Conversion Price. Each Class A Preferred shall be convertible at
an office or agency referred to below into a number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to
the nearest one-hundredth (1/100th) of a share) as is determined by
dividing 63/100 Dollars ($0.63) by the Conversion Price in effect on the
Conversion Date. As of the date this Amended and Restated Certificate of
Incorporation was filed with the Secretary of State of Delaware, the price
at which Common Stock shall initially be issuable upon conversion shall be
63/100 Dollars ($0.63) per share, which price may be adjusted from time to
time as provided in Section 4(f) (the "Conversion Price").
(c) Method of Conversion. In order to exercise such conversion
privilege, the holder of any Class A Preferred to be converted shall
present and surrender the certificate(s) representing such Class A
Preferred during usual business hours at any office or agency of the
Corporation maintained for the transfer of Class A Preferred and shall
deliver a written notice of its election to convert the Class A Preferred
represented by such certificate(s), or any portion thereof, specified in
such notice. Such notice shall also state the name or names (with address)
in which the certificate or certificates for
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Common Stock issuable on such conversion shall be issued. If so required by
the Corporation, any certificate for Class A Preferred surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder of such Class
A Preferred or such holder's duly authorized representative. Each
conversion of Class A Preferred shall be deemed to have been effected on
the date (the "Conversion Date") on which the certificate or certificates
representing such Class A Preferred shall have been surrendered and any
required notice and instruments of transfer received as aforesaid. Subject
to the provisions of Section 4(f)(viii), the person or persons in whose
name or names any certificate or certificates for Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of such Common Stock immediately prior to the close of
business on the Conversion Date. Subject to the provisions of Section
(f)(viii), as promptly as practicable (and in any event within two (2)
business days) after the presentation and surrender for conversion, as
herein provided, of any certificate or certificates for Class A Preferred,
the Corporation shall issue and deliver at such office or agency, to or
upon the written order of the holder thereof, a certificate or certificates
for the number of shares of Common Stock issuable upon such conversion. In
case any certificate or certificates for Class A Preferred shall be
surrendered for conversion of less than all of the Class A Preferred
represented thereby, the Corporation shall deliver at such office or
agency, to or upon the written order of the holder thereof, a certificate
or certificates for the number of Class A Preferred represented by such
surrendered certificate or certificates which are not converted. The
issuance of certificates for Common Stock issuable upon the conversion of
Class A Preferred, and the issuance of certificates representing Class A
Preferred which are not converted as described above, shall be at the
Corporation's expense and without charge to the converting holder for any
tax imposed on the Corporation in respect of the issue thereof. The
Corporation shall not, however, be required to pay any tax which may be
payable with respect to any transfer involved in the issue and delivery of
any certificate in a name other than that of the holder of the Class A
Preferred and the Corporation shall not be required to issue or deliver any
such certificate unless and until the person requesting the issue thereof
shall have paid to the Corporation the amount of such tax or has
established to the satisfaction of the Corporation that such tax has been
paid.
(d) No Adjustment for Dividends. With respect to any conversion of
Class A Preferred into Common Stock pursuant to this Section 4, no
adjustment shall be made for dividends declared but as yet unpaid on the
Class A Preferred as of any record date prior to the Conversion Date;
provided, however, that upon the conversion of such Class A Preferred, the
dividend declared but as yet unpaid on the Class A Preferred shall be
payable on the Common Stock issued upon such conversion as if such Common
Stock were outstanding as of the record date for the determination of
holders entitled to receive said dividend.
(e) Fractional Shares. If more than one Class A Preferred share shall
be surrendered for conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Class A Preferred shares
so surrendered. If any fractional interest in a share of Common Stock would
be deliverable upon the conversion of any Class A
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Preferred, the Corporation shall issue a certificate which shall evidence
and include such fractional interest in the Common Stock.
(f) Conversion Price Adjustments. The Conversion Price for the
Class A Preferred shall be subject to adjustment from time to time as
follows:
(i) Common Stock Issued at Less Than the Conversion Price.
If the Corporation shall issue or be deemed to have issued any
Common Stock other than Excluded Shares (as hereinafter defined)
without consideration or for a consideration per share less than
the Conversion Price in effect immediately prior to such issuance
(the "Additional Common Shares"), the Conversion Price in effect
immediately prior to each such issuance shall be reduced to a
price determined by multiplying the then current Conversion Price
by a fraction (A) the numerator of which shall be the sum of (1)
the number of shares of Common Stock outstanding immediately
prior to such issuance, plus (2) the number of shares of Common
Stock that the aggregate consideration received by the Company
for the total number of Additional Common Shares so issued would
purchase at such Conversion Price, and (B) the denominator of
which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of Additional
Common Shares so issued.
For the purposes of any adjustment of the Conversion Price
pursuant to this Section 4(f)(i), the following provisions shall
be applicable:
(A) Cash. In the case of the issuance of Common Stock
for cash, the amount of the consideration received by the
Corporation shall be deemed to be the amount of the cash
proceeds received by the Corporation for such Common Stock
before deducting therefrom any reasonable discounts,
commissions, taxes or other expenses allowed, paid or
incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (other than upon the conversion of
shares of capital stock or other securities of the
Corporation) for a consideration in whole or in part other
than cash, including securities acquired in exchange
therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be
deemed to be the fair value thereof (as determined in good
faith by the Board of Directors of the Corporation, whose
determination shall be conclusive to the extent reasonable),
irrespective of any accounting treatment; provided, that
such fair value as determined by the Board of Directors
shall not exceed the aggregate Current Market Price (as
defined in Section 4(g)) of the Common Stock being issued as
of the date the Board of Directors authorizes the issuance
of such Common Stock.
(C) Options and Convertible Securities. In the case of
the issuance of (i) options, warrants or other rights to
purchase or acquire
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Common Stock (whether or not at the time exercisable) other
than Excluded Shares, (ii) securities by their terms
convertible into or exchangeable for Common Stock (whether
or not at the time so convertible or exchangeable), or (iii)
options, warrants or rights to purchase such convertible or
exchangeable securities (whether or not at the time
exercisable):
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options,
warrants or other rights to purchase or acquire Common
Stock shall be deemed to have been issued at the time
such options, warrants or other rights become
exercisable and for a consideration equal to the
consideration (determined in the manner provided in
Sections 4(f)(i)(A) and (B)), if any, received by the
Corporation upon the issuance of such options, warrants
or other rights plus the minimum purchase price provided
in such options, warrants or other rights for the Common
Stock covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable
securities, or upon the exercise of options, warrants or
other rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or
exchange thereof, shall be deemed to have been issued at
the time such securities become convertible or
exchangeable or such options, warrants or other rights
become exercisable and for a consideration equal to the
consideration, if any, received by the Corporation for
any such securities and related options, warrants or
other rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities and the exercise of any related options,
warrants or other rights (the consideration in each case
to be determined in the manner provided in Sections
4(f)(i)(A) and (B));
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of any such
options, warrants or other rights which have become
exercisable or conversion of or exchange of such
convertible or exchangeable securities which have become
convertible or exchangeable, or any change in the
consideration to be received by the Corporation upon
such exercise, conversion or exchange, including, but
not limited to, a change resulting from any subdivision,
split-up, combination or reclassification thereof, the
Conversion Price as then in effect shall forthwith be
readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options,
warrants or other rights not exercised becoming
exercisable prior
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to such change, or securities not converted or exchanged
becoming convertible or exchangeable prior to such
change, upon the basis of such change but only if as a
result of such adjustment the Conversion Price then in
effect is thereby reduced;
(4) on the expiration or cancellation of any
such options, warrants or other rights, or the
termination of the right to convert or exchange such
convertible or exchangeable securities, if the
Conversion Price shall have been adjusted upon such
becoming exercisable, convertible or exchangeable, such
Conversion Price shall forthwith be readjusted to such
Conversion Price as would have been obtained had an
adjustment been made upon such options, warrants or
other rights becoming exercisable or securities becoming
convertible or exchangeable on the basis of the issuance
of only the number of shares of Common Stock actually
issued upon the exercise of such options, warrants or
other rights, or upon the conversion or exchange of such
securities; and
(5) if the Conversion Price shall have been
adjusted upon such options, warrants or other rights
becoming exercisable or such convertible or exchangeable
securities becoming convertible or exchangeable, no
further adjustment of the Conversion Price shall be made
for the actual issuance of Common Stock upon the
exercise, conversion or exchange thereof.
(ii) Excluded Shares. "Excluded Shares" shall mean Common Stock issued
or reserved for issuance by the Corporation: (i) as a stock dividend
payable in shares of Common Stock; (ii) upon any subdivision or split-up of
the outstanding Common Stock; (iii) to employees, consultants, officers and
directors of the Corporation designated from time to time by the Board of
Directors pursuant to a stock option plan, but not exceeding 4,000,000
shares of Common Stock in the aggregate (adjusted for any stock dividend
payable in shares of Common Stock, upon any subdivision, split-up,
combination or reclassification of Common Stock, occurring after the date
hereof) or such higher number of shares of Common Stock as may be
designated by the vote or written consent of at least seventy-five percent
(75%) of the holders of Group I Preferred Stock; (iv) pursuant to the terms
of any acquisition by the Corporation of all or substantially all of the
operating assets, or more than fifty percent (50%) of the voting capital
stock or other management interest of any Person in a transaction expressly
approved in advance by at least seventy-five percent (75%) of the holders
of Group I Preferred Stock; (v) upon conversion of Class A Preferred, Class
B Preferred, Class C Preferred, Class D Preferred, Class E Preferred, Class
F Preferred, Class G Preferred, Blank Check Preferred or any other class of
convertible preferred stock; (vi) 89,700 shares of Common Stock issuable to
Michael Gallo upon exercise of a warrant; and (vii) 606,000 shares of
Common Stock issuable to certain investors upon exercise of a warrant.
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(iii) Stock Dividends; Stock Splits, Etc. If the number of shares
of Common Stock outstanding at any time after the date of issuance of
the Class A Preferred is increased by a stock dividend payable in
Common Stock or by a subdivision or split-up of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately adjusted so that the
holder of any Class A Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class A Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date of issuance of the Class
A Preferred is decreased by a combination of the outstanding shares of
Common Stock, then immediately after the effective date of such
combination, the Conversion Price shall be appropriately increased so
that the holder of any Class A Preferred thereafter converted shall be
entitled to receive the number of shares of Common Stock of the
Corporation which such holder would have owned immediately following
such action had such Class A Preferred been converted immediately
prior thereto.
(v) Reorganizations, Etc. In the case of any capital
reorganization of the Corporation, any reclassification of Common
Stock, the consolidation of the Corporation with or the merger of the
Corporation with or into any other entity (other than a reorganization
or merger solely for the purpose of the change in the state of
incorporation of the Corporation) or the sale, lease or other transfer
of all or substantially all of the assets of the Corporation to any
other person or entity, each Class A Preferred shall after such
capital reorganization, reclassification, consolidation, merger, sale,
lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common
Stock issuable (at the time of such capital reorganization,
reclassification, consolidation, merger, sale, lease or other
transfer) upon conversion of such Class A Preferred would have been
entitled upon such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer; and in any such
case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the holders of the Class A
Preferred shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be possible, to any shares of capital stock
or other securities or property thereafter deliverable on the
conversion of the Class A Preferred. The subdivision or combination of
Common Stock issuable upon conversion of Class A Preferred at any time
outstanding into a greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for the
purposes of this Section 4(f)(v).
(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons
or assets (excluding cash
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dividends or dividends payable solely in Common Stock) then, in each
such case, each holder of Class A Preferred shall be entitled to
receive a proportionate share of any such distribution as if it had
converted into the number of shares of Common Stock of the Corporation
into which its Class A Preferred would have been convertible as of the
record date fixed for the determination of the holders of Common Stock
of the Corporation entitled to receive such distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 4(f) shall be made to the nearest cent
or to the nearest one-hundredth (1/100th) of a share, as the case may
be. Any provision of this Section 4 to the contrary notwithstanding,
no adjustment in the Conversion Price shall be made if the amount of
such adjustment would be less than one cent ($0.01), but any such
amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of, and together with, any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Shares Upon
Certain Adjustments. In any case in which the provisions of this
Section 4(f) shall require that an adjustment shall become effective
immediately after the record date for an event, the Corporation may
defer until the occurrence of such event the issuing to the holder of
any Class A Preferred converted after such record date and before the
occurrence of such event, the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by
such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment; provided,
that the Corporation upon request shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(ix) Applicable Adjustment. In any case in which the provisions
of this Section 4(f) shall require an adjustment to the Conversion
Price for the Class A Preferred, the applicable adjustment shall be
the largest adjustment lowering the Conversion Price resulting from
the application of any appropriate provision of this Section 4(f) to
such event.
(g) Current Market Price. The "Current Market Price" at any date shall
mean the price per share of Common Stock on such date determined by the
Board of Directors as provided in this Section 4(g). The Current Market
Price shall be the average of the daily closing prices per share of Common
Stock for thirty (30) consecutive business days ending no more than fifteen
(15) business days before the day in question (as adjusted for any stock
dividend, split, combination or reclassification that took effect during
such thirty (30) business day period). The closing price for each day shall
be the last reported sales price regular way or, in case no such reported
sales take place on such day, the average of the last reported bid and
asked prices regular way, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or if not listed or admitted to trading on any national securities
exchange, the average of the highest bid and the lowest asked prices quoted
on the National Association
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<PAGE> 15
of Securities Dealers Automated Quotation ("NASDAQ") System; provided, that
if the Common Stock is not traded in such manner that the quotations
referred to above are available for the period required hereunder, the
Current Market Price per share of Common Stock shall be deemed to be the
fair value as determined by the Board of Directors (whose determination
shall be conclusive), irrespective of any accounting treatment; provided,
that, if within fifteen (15) days of receiving notice of an event under
Section 4(f) requiring the calculation of the Current Market Price a holder
of at least ten percent (10%) of the currently outstanding Class A
Preferred requests the appointment of an independent appraiser, the Board
of Directors shall, within ten (10) days of such request, appoint as an
independent appraiser a nationally-known independent public accounting firm
or investment bank and the Board of Directors shall direct such independent
appraiser to conduct an appraisal and make a report on the Current Market
Price of a share of Common Stock within thirty (30) days of its
appointment. The determination of the Current Market Price by such
independent appraiser shall be final and binding upon the Corporation and
the holders of Class A Preferred. The costs of such independent appraiser
shall be paid by the Corporation. Any independent appraiser so utilized
shall agree to treat all information supplied by the Corporation in a
confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price
in accordance with this Section 4 and shall prepare a certificate
signed by the Treasurer of the Corporation setting forth the adjusted
Conversion Price and the facts requiring such adjustment, and such
certificate shall forthwith be filed at the office of the transfer
agent or agents, if any, for the Class A Preferred and at the
principal office of the Corporation; and
(ii) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price and the facts
requiring such adjustment shall, as soon as practicable, be mailed to
the holders of record of the outstanding Class A Preferred. Where
appropriate, such notice may be given in advance and may be included
as part of a notice required to be mailed under the provisions of
Section 4(j).
(i) Cancellation. All Class A Preferred which shall have been
surrendered for conversion as herein provided in this Section 4 shall no
longer be deemed to be outstanding and all rights with respect to such
Class A Preferred, including the rights, if any, to receive notices and to
vote, shall forthwith cease and terminate, except only the right of the
holders thereof to receive Common Stock or other assets or property in
exchange therefor.
(j) Notice to Holders. In the event that:
(i) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
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(ii) the Corporation shall take action to offer for subscription
pro rata to the holders of any class of its capital stock securities
of any kind;
(iii) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the
Corporation (other than a subdivision, split-up or combination of its
Common Stock), or consolidation or merger to which the Corporation is
a party and for which approval of any stockholders of the Corporation
is required, or the sale or transfer of all or substantially all of
the assets of the Corporation; or
(iv) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of
the Corporation;
then the Corporation shall (x) in case of any such distribution, dividend
or offering of subscription rights, at least ten (10) days prior to the
date or expected date on which the books of the Corporation shall close or
a record shall be taken for the determination of holders entitled to such
distribution or subscription rights, and (y) in the case of any such
reorganization, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up, at least ten (10) days prior to the
date or expected date when the same shall take place, cause written notice
thereof to be mailed to each holder of Class A Preferred at such holder's
address as shown on the books of the Corporation. The notice to be given in
accordance with this Section 4 (j) shall also specify (x) the date or
expected date on which the holders of any class of the Corporation's
capital stock shall be entitled thereto, and (y) the date or expected date
on which the holders of any class of the Corporation's capital stock shall
be entitled to exchange their shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, as the case
may be.
(k) Reservation of Shares. The Corporation shall at all times reserve
and keep available, free from preemptive rights, out of its treasury shares
or its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Class A Preferred, the full number of shares of
Common Stock then deliverable upon the conversion of all Class A Preferred
then outstanding.
(l) Reclassification of Common Stock. For the purposes of this Section
4, the term "Common Stock" shall mean (a) the class of stock designated as
the Common Stock of the Corporation on the date this Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of
Delaware, or (b) any other class of stock resulting from successive changes
or reclassifications of such Common Stock consisting solely of changes in
par value or from no par value to par value, or from par value to no par
value. If at any time as a result of an adjustment made pursuant to the
provisions of Section 4(f)(v), the holder of any Class A Preferred
thereafter surrendered for conversion shall become entitled to receive any
shares of the Corporation other than shares of Common Stock, and the number
of such other shares so receivable upon conversion of any Class A Preferred
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Common
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Stock contained in Section 4(f)(v), and the other provisions of this
Section 4 with respect to the Common Stock shall apply on like terms to any
such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale or
other disposition of any Common Stock of the Corporation theretofore held
in its treasury shall be deemed to be an issuance thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose of
conversion of Class A Preferred requires registration with or approval of
any governmental authority under any Federal or state law or of the NASDAQ
System before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as
possible secure such registration or approval, as the case may be. If, and
so long as, any shares of Common Stock into which the Class A Preferred are
then convertible are listed on any national securities exchange, the
Corporation will, if permitted by the rules of such exchange, list and keep
listed on such exchange, upon official notice of issuance, all of such
Common Stock issuable upon conversion.
(o) Valid Issuance. All Common Stock that may be issued upon
conversion of the Class A Preferred will upon issuance by the Corporation
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof, and the
Corporation shall take no action which will cause a contrary result
(including, without limitation, any action which would cause the Conversion
Price to be less than the par value, if any, of the Common Stock).
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D. TERMS OF CLASS B CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the shares of
the Class B Preferred. Except as otherwise expressly provided in this Section D
of this Article Fourth ("Section D"), references to "Sections" in this Section D
shall be references to Sections within this Section D.
CLASS B CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class B Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class B Preferred shall be entitled to cast the number of
votes which it would have had the right to cast had all of its or his Class
B Preferred been converted, as provided in Section 4, into Common Stock
("As Converted Basis") as of the record date of the meeting at which such
votes are to be cast or as of the date any written consent is taken,
including any fraction of a share of Common Stock into which a holder's
Class B Preferred would be convertible. Holders of Class B Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class B Preferred shall be entitled to notice
of all meetings or actions of stockholders.
(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class B Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of at least seventy-five percent (75%) of the then
outstanding Convertible Preferred Shares, voting as a single class on an As
Converted Basis, and such further affirmative vote, if any, of the holders
of any class of preferred shares as may be otherwise required by the laws
of the State of Delaware or this Amended and Restated Certificate of
Incorporation:
(i) amend this Amended and Restated Certificate of Incorporation
or the By-laws of the Corporation in any manner that would or could
prejudice the rights of the holders of the Convertible Preferred
Shares, including any such amendment (or similar effect which would
occur by virtue of the merger or consolidation of the Corporation)
that does any of the following:
(A) increases or decreases the par value of the issued
Convertible Preferred Shares;
(B) changes issued Convertible Preferred Shares into a
lesser number of shares of the same class or into the same or a
different number of shares of any other class, with or without
par value, theretofore or then authorized;
(C) changes the terms, or adds terms, of the Convertible
Preferred Shares in any manner prejudicial to the holders of such
shares;
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(D) changes the terms of issued shares of any class senior,
junior, or pari passu to the Convertible Preferred Shares in any
manner prejudicial to the holders of Convertible Preferred
Shares;
(E) authorizes shares of another class that are convertible
into, or authorizes the conversion of shares of another class
into, Convertible Preferred Shares or authorizes the Directors to
fix or alter conversion rights of shares of another class that
are convertible into Convertible Preferred Shares;
(F) provides, in the case of an amendment described in
Section 1(b)(i)(A) or (B), that the stated capital of the
Corporation shall be reduced or eliminated as a result of the
amendment, or provides, in the case of Section 1(b)(E), that the
stated capital of the Corporation shall be reduced or eliminated
upon the exercise of such conversion rights; provided that any
such reduction or elimination is consistent with Section 244 of
the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation,
or provides that thereafter an amendment to this Amended and
Restated Certificate of Incorporation may be adopted that changes
substantially the purposes of the Corporation; or
(H) changes the Corporation into a nonprofit corporation.
(ii) Authorize, issue or sell or obligate itself to authorize,
issue or sell any class of its capital stock or other securities
(including other debt securities) convertible into or exercisable for
any equity security which ranks senior or pari passu in right, either
as to voting, dividends or upon liquidation, with the Convertible
Preferred Shares.
(c) Notwithstanding anything herein to the contrary contained in
Section 1(a) or (b), so long as any Group I Preferred Stock remains
outstanding, the Corporation shall not, without the affirmative vote by the
holders of at least seventy-five percent (75%) of the then outstanding
Group I Preferred Stock on an As Converted Basis, effect any (i) sale,
lease, assignment, transfer or other conveyance of all or substantially all
of the assets or capital stock of the Corporation, (ii) any
recapitalization, reclassification, reorganization or any similar
transaction with respect to any of its shares of capital stock, (iii) any
consolidation or merger involving the Corporation, or (iv) effect any
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class B Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable when and if declared
by the Board of Directors of the Corporation out of funds legally available
therefor annually, prior and in preference to any declaration or payment of
any dividend on the Common Stock, in
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arrears on the first day of January of each year. The dividends provided
for in this Section 2(a) shall not be cumulative.
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class B Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock;
provided, that for the purpose of determining the amount of any such
dividend payable to the holders of Class B Preferred, such holders shall be
entitled to receive a proportionate amount of such dividends as if all
issued and outstanding Class B Preferred had been converted into Common
Stock as of the record date for the determination of holders entitled to
receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and Common Stock will be entitled to receive
from the Corporation's assets available for distribution to stockholders,
the amounts and preferences as set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or distribution shall be made to the holders of Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E
Preferred, Class G Preferred, Blank Check Preferred or Common Stock or
shares of any class of capital stock of the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
dividends on such shares; the holders of Class D Preferred shall
receive cash in
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the amount of One and 35/100 Dollars ($1.35) per share, plus an amount
equal to declared but unpaid dividends on such shares; the holders of
Class E Preferred shall receive cash in the amount of the Class E
Liquidation Preference Amount; provided, however, that except as
provided in the next proviso, the aggregate amount payable to the
holders of Class E Preferred pursuant to this Section 3(a)(ii) shall
not exceed Five Million Dollars ($5,000,000); provided, further, that
if the holders of Class E Preferred shall have purchased additional
shares of Common Stock pursuant to the terms of Section 1(h) of the
Purchase Agreement, the aggregate amount set forth in the immediately
preceding proviso shall be increased by the aggregate amount actually
paid for such Common Stock; the holders of Class G Preferred shall
receive cash in the amount of One and 85/100 Dollars ($1.85) per
share, plus an amount equal to declared but unpaid dividends on such
shares; and the holders of Blank Check Preferred shall receive the
liquidation preference which is set forth in the Certificate of
Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount payable to the holders of the Common Stock
pursuant to this Section 3(a)(v) exceed One Million One Hundred
Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i) - (vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay
the amounts payable under Section 3(a)(i) to the holders of all the
outstanding Class F Preferred, the
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holders of Class F Preferred shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. Further, in the event that the holders of the Class
F Preferred shall have been paid all amounts payable under Section 3(a)(i)
but the Corporation has insufficient funds to pay the amounts payable under
Section 3(a)(ii) to the holders of all the outstanding Class C Preferred,
the holders of Class C Preferred shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. Further, if, upon any such event, the Corporation
has insufficient funds to pay the amounts payable under Section 3(a)(iii)
to the holders of all the outstanding Group II Preferred Stock, the holders
of such Group II Preferred Stock shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Corporation, nor the consolidation or
merger of the Corporation with or into any other corporation or
corporations, nor the consolidation or merger of any other corporation or
corporations with or into the Corporation, nor the reorganization of the
Corporation, shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3 if the
holders of at least fifty-one percent (51%) of the then outstanding
Convertible Preferred Shares and Class F Preferred together elect to have
such events not deemed a liquidation of the Corporation by giving written
notice to the Corporation.
(c) After the payment in cash to the holders of Class B Preferred of
the full preferential amount fixed in accordance with the provisions of
Section 3(a) with respect to the outstanding Class B Preferred, the holders
of outstanding Class B Preferred as such will have no right or claim to any
of the remaining assets of the Corporation.
(d) In the event (i) the holders of the Class B Preferred vote to
convert their shares of Class B Preferred into shares of Common Stock
immediately prior to or in connection with an event specified in Section
3(a) or (ii) any holder of Class B Preferred otherwise converts their
shares of Class B Preferred into Common Stock in accordance with such
holder's rights under Section 4, the priorities and preferences set forth
in Section 3(a) shall be of no further effect and the holders of such
Common Stock shall share all of the assets of the Corporation available for
distribution to all holders of Common Stock ratably in proportion to the
number of shares of Common Stock held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class B Preferred
shall, subject to the terms and conditions hereinafter set forth, convert
such Class B Preferred into fully paid and nonassessable shares of Common
Stock at the Conversion Price (as defined in Section 4(b)) in effect on the
Conversion Date (as defined in Section 4(c)), at the following times and
pursuant to the following conditions: (i) at any time, at such
stockholder's option; (ii) automatically and simultaneously upon the
Closing of a Public Offering; or (iii) upon the written notice to the
Corporation at the election by the holders
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of seventy-five percent (75%) of the outstanding Class B Preferred, voting
on an As Converted Basis.
(b) Conversion Price. Each Class B Preferred shall be convertible at
an office or agency referred to below into a number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to
the nearest one-hundredth (1/100th) of a share) as is determined by
dividing One and 25/100 Dollars ($1.25) by the Conversion Price in effect
on the Conversion Date. As of the date of this Amended and Restated
Certificate of Incorporation was filed with the Secretary of State of
Delaware, the price at which Common Stock shall initially be issuable upon
conversion shall be One and 25/100 Dollars ($1.25) per share, which price
may be adjusted from time to time as provided in Section 4(f) (the
"Conversion Price").
(c) Method of Conversion. In order to exercise such conversion
privilege, the holder of any Class B Preferred to be converted shall
present and surrender the certificate(s) representing such Class B
Preferred during usual business hours at any office or agency of the
Corporation maintained for the transfer of Class B Preferred and shall
deliver a written notice of its election to convert the Class B Preferred
represented by such certificate(s), or any portion thereof, specified in
such notice. Such notice shall also state the name or names (with address)
in which the certificate or certificates for Common Stock issuable on such
conversion shall be issued. If so required by the Corporation, any
certificate for Class B Preferred surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder of such Class B Preferred or such
holder's duly authorized representative. Each conversion of Class B
Preferred shall be deemed to have been effected on the date (the
"Conversion Date") on which the certificate or certificates representing
such Class B Preferred shall have been surrendered and any required notice
and instruments of transfer received as aforesaid. Subject to the
provisions of Section 4(f)(viii), the person or persons in whose name or
names any certificate or certificates for Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders
of record of such Common Stock immediately prior to the close of business
on the Conversion Date. Subject to the provisions of Section 4(f)(viii), as
promptly as practicable (and in any event within two (2) business days)
after the presentation and surrender for conversion, as herein provided, of
any certificate for Class B Preferred, the Corporation shall issue and
deliver at such office or agency, to or upon the written order of the
holder thereof, a certificate or certificates for the number of shares of
Common Stock issuable upon such conversion. In case any certificate for
Class B Preferred shall be surrendered for conversion of less than all of
the Class B Preferred represented thereby, the Corporation shall deliver at
such office or agency, to or upon the written order of the holder thereof,
a certificate or certificates for the number of Class B Preferred
represented by such surrendered certificate which are not converted. The
issuance of certificates for Common Stock issuable upon the conversion of
Class B Preferred, and the issuance of certificates representing Class B
Preferred which are not converted as described above, shall be at the
Corporation's expense and without charge to the converting holder for any
tax imposed on the Corporation in respect of the issue thereof. The
Corporation shall not, however, be required to pay any tax which may be
payable with respect to any transfer involved in the issue and delivery of
any certificate in a name other than that of the holder of the Class B
Preferred and the Corporation shall not
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be required to issue or deliver any such certificate unless and until the
person requesting the issue thereof shall have paid to the Corporation the
amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(d) No Adjustment for Dividends. With respect to any conversion of
Class B Preferred into Common Stock pursuant to this Section 4, no
adjustment shall be made for dividends declared but as yet unpaid on the
Class B Preferred as of any record date prior to the Conversion Date;
provided, however, that upon the conversion of such Class B Preferred, the
dividend declared but as yet unpaid on the Class B Preferred shall be
payable on the Common Stock issued upon such conversion as if such shares
of Common Stock were outstanding as of the record date for the
determination of holders entitled to receive said dividend.
(e) Fractional Shares. If more than one Class B Preferred share shall
be surrendered for conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Class B Preferred shares
so surrendered. If any fractional interest in a share of Common Stock would
be deliverable upon the conversion of any Class B Preferred, the
Corporation shall issue a certificate which shall evidence and include such
fractional interest in the share of Common Stock.
(f) Conversion Price Adjustments. The Conversion Price for the Class B
Preferred shall be subject to adjustment from time to time as follows:
(i) Common Stock Issued at Less Than the Conversion Price. If the
Corporation shall issue or be deemed to have issued any Common Stock
other than Excluded Shares (as defined in Article 4, Section C.
4(f)(ii) of this Amended and Restated Certificate of Incorporation)
without consideration or for a consideration per share less than the
Conversion Price in effect immediately prior to such issuance, the
Conversion Price in effect immediately prior to each such issuance
shall be reduced to a price determined by multiplying the then current
Conversion Price by a fraction (A) the numerator of which shall be the
sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issuance, plus (2) the number of shares of
Common Stock that the aggregate consideration received by the Company
for the total number of Additional Common Shares so issued would
purchase at such Conversion Price, and (B) the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of Additional Common Shares so
issued.
For the purposes of any adjustment of the Conversion Price
pursuant to this Section 4(f)(i), the following provisions shall be
applicable:
(A) Cash. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Corporation
shall be deemed to be the amount of the cash proceeds received by
the Corporation for such Common Stock before deducting therefrom
any reasonable discounts, commissions, taxes or other expenses
allowed, paid or incurred
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by the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (other than upon the conversion of
shares of capital stock or other securities of the Corporation)
for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration
other than cash shall be deemed to be the fair value thereof (as
determined in good faith by the Board of Directors of the
Corporation, whose determination shall be conclusive to the
extent reasonable), irrespective of any accounting treatment;
provided, that such fair value as determined by the Board of
Directors shall not exceed the aggregate Current Market Price (as
defined in Section 4(g)) of the Common Stock being issued as of
the date the Board of Directors authorizes the issuance of such
Common Stock.
(C) Options and Convertible Securities. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable)
other than Excluded Shares, (ii) securities by their terms
convertible into or exchangeable for Common Stock (whether or not
at the time so convertible or exchangeable) or (iii) options,
warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall be
deemed to have been issued at the time such options,
warrants or other rights become exercisable and for a
consideration equal to the consideration (determined in the
manner provided in Sections 4(f)(i)(A) and (B) above), if
any, received by the Corporation upon the issuance of such
options, warrants or other rights plus the minimum purchase
price provided in such options, warrants or other rights for
the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed
to have been issued at the time such securities become
convertible or exchangeable or such options, warrants or
other rights become exercisable and for a consideration
equal to the consideration, if any, received by the
Corporation for any such securities and related options,
warrants or other rights (excluding any cash received on
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<PAGE> 26
account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities and the exercise of any related options, warrants
or other rights (the consideration in each case to be
determined in the manner provided in Sections 4(f)(i)(A) and
(B) above);
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options,
warrants or other rights which have become exercisable or
conversion of or exchange of such convertible or
exchangeable securities which have become convertible or
exchangeable, or any change in the consideration to be
received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change
resulting from any subdivision, split-up, combination or
reclassification thereof, the Conversion Price as then in
effect shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment been
made upon such options, warrants or other rights not
exercised becoming exercisable prior to such change, or
securities not converted or exchanged becoming convertible
or exchangeable prior to such change, upon the basis of such
change but only if as a result of such adjustment the
Conversion Price then in effect is thereby reduced;
(4) on the expiration or cancellation of any such
options, warrants or other rights, or the termination of the
right to convert or exchange such convertible or
exchangeable securities, if the Conversion Price shall have
been adjusted upon such becoming exercisable, convertible or
exchangeable, such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options,
warrants or other rights becoming exercisable or securities
becoming convertible or exchangeable on the basis of the
issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants
or other rights, or upon the conversion or exchange of such
securities; and
(5) if the Conversion Price shall have been adjusted
upon such options, warrants or other rights becoming
exercisable or such convertible or exchangeable securities
becoming convertible or exchangeable, no further adjustment
of the Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise, conversion or
exchange thereof.
(ii) Excluded Shares. "Excluded Shares" has the meaning given to
it in Article 4, Section C. 4(f)(ii) of this Amended and Restated
Certificate of Incorporation.
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(iii) Stock Dividends; Stock Splits, Etc. If the number of shares
of Common Stock outstanding at any time after the date of issuance of
the Class B Preferred is increased by a stock dividend payable in
Common Stock or by a subdivision or split-up of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately adjusted so that the
holder of any Class B Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class B Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date of issuance of the Class
B Preferred is decreased by a combination of the outstanding shares of
Common Stock, then immediately after the effective date of such
combination, the Conversion Price shall be appropriately increased so
that the holder of any Class B Preferred thereafter converted shall be
entitled to receive the number of shares of Common Stock of the
Corporation which such holder would have owned immediately following
such action had such Class B Preferred been converted immediately
prior thereto.
(v) Reorganizations, Etc. In the case of any capital
reorganization of the Corporation, any reclassification of Common
Stock, the consolidation of the Corporation with or the merger of the
Corporation with or into any other entity (other than a reorganization
or merger solely for the purpose of the change in the state of
incorporation of the Corporation) or the sale, lease or other transfer
of all or substantially all of the assets of the Corporation to any
other person or entity, each Class B Preferred shall after such
capital reorganization, reclassification, consolidation, merger, sale,
lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common
Stock issuable (at the time of such capital reorganization,
reclassification, consolidation, merger, sale, lease or other
transfer) upon conversion of such Class B Preferred would have been
entitled upon such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer; and in any such
case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the holders of the Class B
Preferred shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be possible, to any shares of capital stock
or other securities or property thereafter deliverable on the
conversion of the Class B Preferred. The subdivision or combination of
Common Stock issuable upon conversion of Class B Preferred at any time
outstanding into a greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for the
purposes of this Section 4(f)(v).
(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons
or assets (excluding cash
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dividends or dividends payable solely in Common Stock) then, in each
such case, each holder of Class B Preferred shall be entitled to
receive a proportionate share of any such distribution as if it had
converted into the number of shares of Common Stock of the Corporation
into which its Class B Preferred would have been convertible as of the
record date fixed for the determination of the holders of outstanding
shares of Common Stock of the Corporation entitled to receive such
distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 4(f) shall be made to the nearest cent
or to the nearest one-hundredth (1/100th) of a share, as the case may
be. Any provision of this Section 4 to the contrary notwithstanding,
no adjustment in the Conversion Price shall be made if the amount of
such adjustment would be less than one cent ($0.01), but any such
amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of, and together with, any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Shares Upon
Certain Adjustments. In any case in which the provisions of this
Section 4(f) shall require that an adjustment shall become effective
immediately after the record date for an event, the Corporation may
defer until the occurrence of such event the issuing to the holder of
any Class B Preferred converted after such record date and before the
occurrence of such event the Additional Common Shares issuable upon
such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment; provided, that the Corporation upon
request shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(ix) Applicable Adjustment. In any case in which the provisions
of this Section 4(f) shall require an adjustment to the Conversion
Price for the Class B Preferred, the applicable adjustment shall be
the largest adjustment lowering the Conversion Price resulting from
the application of any appropriate provision of this Section 4(f) to
such event.
(g) Current Market Price. "Current Market Price" shall have the meaning
given in Article 4, Section C. 4.(g) of this Amended and Restated Certificate of
Incorporation; provided, that, if within fifteen (15) days of receiving notice
of an event under Section 4(f) requiring the calculation of the Current Market
Price a holder of at least ten percent (10%) of the currently outstanding Class
B Preferred requests the appointment of an independent appraiser, the Board of
Directors shall, within ten (10) days of such request, appoint as an independent
appraiser a nationally-known independent public accounting firm or investment
bank and the Board of Directors shall direct such independent appraiser to
conduct an appraisal and make a report on the Current Market Price of a share of
Common Stock within thirty (30) days of its appointment. The determination of
Current Market Price by such independent appraiser
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<PAGE> 29
shall be final and binding upon the Corporation and the holders of Class B
Preferred. The costs of such independent appraiser shall be paid by the
Corporation. Any independent appraiser so utilized shall agree to treat all
information supplied by the Corporation in a confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price in
accordance with this Section 4 and shall prepare a certificate signed by
the Treasurer of the Corporation setting forth the adjusted Conversion
Price and the facts requiring such adjustment, and such certificate shall
forthwith be filed at the office of the transfer agent or agents, if any,
for the Class B Preferred and at the principal office of the Corporation;
and
(ii) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price and the facts requiring such
adjustment shall, as soon as practicable, be mailed to the holders of
record of the outstanding Class B Preferred. Where appropriate, such notice
may be given in advance and may be included as part of a notice required to
be mailed under the provisions of Section 4(j).
(i) Cancellation. All Class B Preferred which shall have been surrendered
for conversion as herein provided in this Section 4 shall no longer be deemed to
be outstanding and all rights with respect to such Class B Preferred, including
the rights, if any, to receive notices and to vote, shall forthwith cease and
terminate, except only the right of the holders thereof to receive Common Stock
or other assets or property in exchange therefor.
(j) Notice to Holders. In the event that:
(i) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
(ii) the Corporation shall take action to offer for subscription pro
rata to the holders of any class of its capital stock securities of any
kind;
(iii) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the Corporation
(other than a subdivision, split-up or combination of its Common Stock), or
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or the sale or
transfer of all or substantially all of the assets of the Corporation; or
(iv) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Corporation;
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then the Corporation shall (x) in case of any such distribution, dividend or
offering of subscription rights, at least ten (10) days prior to the date or
expected date on which the books of the Corporation shall close or a record
shall be taken for the determination of holders entitled to such distribution or
subscription rights, and (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, at least ten (10) days prior to the date or expected
date when the same shall take place, cause written notice thereof to be mailed
to each holder of Class B Preferred at such holder's address as shown on the
books of the Corporation. The notice to be given in accordance with this Section
4(j) shall also specify (x) the date or expected date on which the holders of
any class of the Corporation's capital stock shall be entitled thereto, and (y)
the date or expected date on which the holders of any class of the Corporation's
capital stock shall be entitled to exchange their shares for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, as the case may
be.
(k) Reservation of Shares. The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of its treasury shares or its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of the Class B Preferred, the full number of shares of Common Stock
then deliverable upon the conversion of all Class B Preferred then outstanding.
(l) Reclassification of Common Stock. For the purposes of this Section 4,
the term "Common Stock" shall mean (i) the class of stock designated as the
Common Stock of the Corporation on the date of this Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of Delaware,
or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par value
or from no par value to par value, or from par value to no par value. If at any
time as a result of an adjustment made pursuant to the provisions of Section
4(f)(v), the holder of any Class B Preferred thereafter surrendered for
conversion shall become entitled to receive any shares of the Corporation other
than Common Stock, and the number of such other shares so receivable upon
conversion of any Class B Preferred shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Section 4(f)(v), and
the other provisions of this Section 4 with respect to the Common Stock shall
apply on like terms to any such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale or other
disposition of any Common Stock of the Corporation theretofore held in its
treasury shall be deemed to be an issuance thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose of
conversion of Class B Preferred requires registration with or approval of any
governmental authority under any Federal or state law or of the NASDAQ System
before such shares may be validly issued or delivered upon conversion, the
Corporation will in good faith and as expeditiously as possible secure such
registration or approval, as the case may be. If, and so long as, any Common
Stock into which the Class B Preferred are then convertible are listed on any
national securities exchange, the Corporation will, if
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permitted by the rules of such exchange, list and keep listed on such exchange,
upon official notice of issuance, all of such Common Stock issuable upon
conversion.
(o) Valid Issuance. All Common Stock that may be issued upon conversion of
the Class B Preferred will upon issuance by the Corporation be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof, and the Corporation shall take no action
which will cause a contrary result (including, without limitation, any action
which would cause the Conversion Price to be less than the par value, if any, of
the Common Stock).
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E. TERMS OF CLASS C CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the shares of
the Class C Preferred. Except as otherwise expressly provided in this Section E
of this Article Fourth ("Section E"), references to "Sections" in this Section E
shall be references to Sections within this Section E.
CLASS C CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class C Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class C Preferred shall be entitled to cast the number of
votes which it would have had the right to cast had all of its or his Class
C Preferred been converted, as provided in Section 4, into Common Stock
("As Converted Basis") as of the record date of the meeting at which such
votes are to be cast or as of the date any written consent is taken,
including any fraction of a share of Common Stock into which a holder's
Class C Preferred would be convertible. Holders of Class C Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class C Preferred shall be entitled to notice
of all meetings or actions of stockholders.
(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class C Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of at least seventy-five percent (75%) of the then
outstanding Class C Preferred, voting as a single class on an As Converted
Basis, and such further affirmative vote, if any, of the holders of any
class of preferred shares as may be otherwise required by the laws of the
State of Delaware or this Amended and Restated Certificate of
Incorporation:
(i) amend this Amended and Restated Certificate of Incorporation or
the By-laws of the Corporation in any manner that would or could prejudice
the rights of the holders of the Class C Preferred, including any such
amendment (or similar effect which would occur by virtue of the merger or
consolidation of the Corporation) that does any of the following:
(A) increases or decreases the par value of the issued Class C
Preferred;
(B) changes issued Class C Preferred into a lesser number of
shares of the same class or into the same or a different number of
shares of any other class, with or without par value, theretofore or
then authorized;
(C) changes the terms, or adds terms, of the Class C Preferred in
any manner prejudicial to the holders of such shares;
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(D) changes the terms of issued shares of any class senior,
junior or pari passu to the Class C Preferred in any manner
prejudicial to the holders of the Class C Preferred;
(E) authorizes shares of another class that are convertible into,
or authorizes the conversion of shares of another class into, Class C
Preferred or authorizes the Directors to fix or alter conversion
rights of shares of another class that are convertible into Class C
Preferred;
(F) provides, in the case of an amendment described in Section
1(b)(i)(A) or (B), that the stated capital of the Corporation shall be
reduced or eliminated as a result of the amendment, or provides, in
the case of Section 1(b)(i)(E), that the stated capital of the
Corporation shall be reduced or eliminated upon the exercise of such
conversion rights; provided that any such reduction or elimination is
consistent with Section 244 of the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation, or
provides that thereafter an amendment to this Amended and Restated
Certificate of Incorporation may be adopted that changes substantially
the purposes of the Corporation; or
(H) changes the Corporation into a nonprofit corporation.
(ii) Authorize, issue or sell or obligate itself to authorize, issue
or sell any class of its capital stock or other securities (including debt
securities) convertible into or exercisable for any equity security which
ranks senior or pari passu in right, either as to voting, dividends or upon
liquidation or otherwise, with the Class C Preferred.
(c) Notwithstanding anything herein to the contrary contained in Section
1(a) or (b), so long as any Group I Preferred Stock remains outstanding, the
Corporation shall not, without the affirmative vote by the holders of at least
seventy-five percent (75%) of the then outstanding Group I Preferred Stock on an
As Converted Basis, effect (i) any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets or capital stock of the
Corporation, (ii) any recapitalization, reclassification, reorganization or any
similar transaction with respect to any of its shares of capital stock, (iii)
any consolidation or merger involving the Corporation or (iv) effect any
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class C Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable out of funds legally
available therefor, prior and in preference to any declaration or payment of any
dividend on the Class A Preferred, Class B Preferred, Class D Preferred, Class E
Preferred, Class F Preferred, Class G Preferred or Common Stock or any shares of
any class of capital stock of the
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Corporation. The dividends provided for in this Section 2(a) shall be cumulative
from the date of issuance, whether or not at the time such dividends shall
accrue or become due or at any other time there shall be profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
Accumulations of accrued dividends shall be compounded annually at the rate of
8% per annum. For purposes of this Section 2(a), the date on which the
Corporation shall initially issue any Class C Preferred shall be deemed to be
the date of issuance of such Class C Preferred regardless of how many times
transfer of such Class C Preferred shall be made on stock records maintained by
or for the Corporation and regardless of the number of certificates which may be
issued to evidence such Class C Preferred (whether by reason of transfers of
such Class C Preferred or for any other reason).
(b) The dividends shall accrue until and be paid upon the earliest to occur
of: (i) an initial public offering of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended (an "IPO"),
(ii) a sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the property and
assets of the Corporation, (iii) the consolidation or merger of the Corporation
with or into any other corporation or corporations, or (iv) the liquidation of
the Corporation. Notwithstanding the foregoing, in the case of an event
specified in clause (ii), (iii) or (iv) of this Section 2(b), the proceeds or
consideration which would otherwise be paid in such event to the holders of
Class C Preferred shall be increased by the amount of all accrued unpaid
dividends thereon instead of such accrued amount being declared and paid as
dividends. In the event of an IPO, the Corporation may, at its option, pay the
accrued and unpaid dividends in Common Stock which Common Stock shall be valued
for this purpose at the price paid by the public. If any dividend on the
outstanding Class C Preferred shall for any reason not be paid at the time such
dividend shall become due, then such dividend in arrears shall be paid as soon
as payments of same shall be legally permissible. Until such dividend in arrears
is paid, dividends shall continue to accrue on the outstanding Class C
Preferred.
(c) In addition to the dividends provided for in Section 2(a), the holders
of outstanding Class C Preferred shall be entitled to receive, when, as and if
declared by the Board of Directors from funds legally available therefor, a
portion of any dividends declared on Common Stock; provided, that for the
purpose of determining the amount of any such dividend payable to the holders of
Class C Preferred, such holders shall be entitled to receive a proportionate
amount of such dividends as if all issued and outstanding Class C Preferred had
been converted into Common Stock as of the record date for the determination of
holders entitled to receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of the
Corporation, whether voluntary or involuntary, or the sale, conveyance, exchange
or transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all the property and assets of the Corporation, or the
reorganization, consolidation or merger of the Corporation with or into any
other company or companies, or a transaction or series of related transactions
in which more than fifty percent (50%) of the voting
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power of the Corporation is disposed of or sold (whether by the Corporation or
the holders of outstanding capital stock), the holders of outstanding Preferred
Stock and Common Stock will be entitled to receive from the Corporation's assets
available for distribution to stockholders, the amounts and preferences as set
forth below:
(i) The holders of Class F Preferred shall receive cash in the amount
of Twelve Dollars ($12.00) per share, plus an amount equal to all declared
but unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred, Class
C Preferred, Class D Preferred, Class E Preferred, Class G Preferred, Blank
Check Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but unpaid
dividends on such shares, before any payment or distribution shall be made
to the holders of Class A Preferred, Class B Preferred, Class D Preferred,
Class E Preferred, Class G Preferred, Blank Check Preferred or Common Stock
or shares of any class of capital stock of the Corporation;
(iii) After payment to the holders of Class C Preferred and Class F
Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in the
amount of 63/100 Dollars ($0.63) per share, plus an amount equal to
declared but unpaid dividends on such shares; the holders of Class B
Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid dividends on
such shares; the holders of Class D Preferred shall receive cash in the
amount of One and 35/100 Dollars ($1.35) per share, plus an amount equal to
declared but unpaid dividends on such shares; the holders of Class E
Preferred shall receive cash in the amount of the Class E Liquidation
Preference Amount; provided, however, that except as provided in the next
proviso, the aggregate amount payable to the holders of Class E Preferred
pursuant to this Section 3(a)(ii) shall not exceed Five Million Dollars
($5,000,000); provided, further, that if the holders of Class E Preferred
shall have purchased additional shares of Common Stock pursuant to the
terms of Section 1(h) of the Purchase Agreement, the aggregate amount set
forth in the immediately preceding proviso shall be increased by the
aggregate amount actually paid for such Common Stock; the holders of Class
G Preferred shall receive cash in the amount of One and 85/100 Dollars
($1.85) per share, plus an amount equal to declared but unpaid dividends on
such shares; and the holders of Blank Check Preferred shall receive the
liquidation preference which is set forth in the Certificate of Designation
setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the holders
of Class E Preferred shall be entitled to receive payment of an amount
equal to the difference of (x) the
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Class E Liquidation Preference Amount, less (y) the aggregate payments
received by the holders of Class E Preferred pursuant to Section 3(a)(iii);
(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the holders
of outstanding shares of Common Stock as of the date of this Amended and
Restated Certificate of Incorporation was filed with the Secretary of State
of the State of Delaware (not including Common Stock issued upon conversion
of Preferred Stock) shall receive cash in the amount of the original
amounts for which such Common Stock was issued, which will be distributed
ratably in proportion to the number of shares of Common Stock held by such
holder, but in no event shall the aggregate amount payable to the holders
of the Common Stock pursuant to this Section 3(a)(v) exceed One Million One
Hundred Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common Stock
(not including Common Stock issued upon conversion of Preferred Stock) of
their liquidation preference as set forth in Sections 3(a)(i)-(v), the
Founders and holders of vested options to purchase Common Stock shall
receive cash in an amount equal to their pro-rata portion (using the number
of shares the vested option holder would have if the options had been
exercised at the then current exercise price) of Two Million Dollars
($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i)-(vi), all
remaining assets of the Corporation shall be distributed ratably to the
holders of outstanding shares of Common Stock in proportion to the number
of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay the
amounts payable under Section 3(a)(i) to the holders of all the outstanding
Class F Preferred, the holders of Class F Preferred shall share ratably in any
distribution of assets in proportion to the full amounts to which they would
otherwise be respectively entitled. Further, in the event that the holders of
the Class F Preferred shall have been paid all amounts payable under Section
3(a)(i) but the Corporation has insufficient funds to pay the amounts payable
under Section 3(a)(ii) to the holders of all the outstanding Class C Preferred,
the holders of Class C Preferred shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. Further, if, upon any such event, the Corporation has
insufficient funds to pay the amounts payable under Section 3(a)(iii) to the
holders of all the outstanding Group II Preferred Stock, the holders of such
Group II Preferred Stock shall share ratably in any distribution of assets in
proportion to the full amounts to which they would otherwise be respectively
entitled.
(b) After the payment in cash to the holders of Class C Preferred of the
full preferential amount fixed in accordance with the provisions of Section 3(a)
with respect to the outstanding Class C Preferred, the holders of outstanding
Class C Preferred as such will have no right or claim to any of the remaining
assets of the Corporation.
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(c) In the event (i) the holders of the Class C Preferred vote to convert
their shares of Class C Preferred into Common Stock immediately prior to or in
connection with an event specified in Section 3(a) or (ii) any holder of Class C
Preferred otherwise converts their shares of Class C Preferred into Common Stock
in accordance with such holder's rights under Section 4, the priorities and
preferences set forth in Section 3(a) shall be of no further effect and the
holders of such Common Stock shall share all of the assets of the Corporation
available for distribution to all holders of Common Stock ratably in proportion
to the number of shares of Common Stock held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class C Preferred shall,
subject to the terms and conditions hereinafter set forth, convert such Class C
Preferred into fully paid and nonassessable shares of Common Stock at the
Conversion Price (as defined in Section 4(b)) in effect on the Conversion Date
(as defined in Section 4(c)), at the following times and pursuant to the
following conditions: (i) at any time, at such stockholder's option; (ii)
automatically and simultaneously upon the Closing of a Public Offering; or (iii)
upon the written notice to the Corporation at the election by the holders of
seventy-five percent (75%) of the outstanding Class C Preferred, voting on an As
Converted Basis.
(b) Conversion Price. Each Class C Preferred shall be convertible at an
office or agency referred to below into a number of fully paid and nonassessable
shares of Common Stock (calculated as to each conversion to the nearest
one-hundredth (1/100th) of a share) as is determined by dividing Three and
67/100 Dollars ($3.67) by the Conversion Price in effect on the Conversion Date.
As of the date this Amended and Restated Certificate of Incorporation was filed
with the Secretary of State of Delaware, the price at which Common Stock shall
initially be issuable upon conversion shall be Three and 67/100 Dollars ($3.67)
per share, which price may be adjusted from time to time as provided in Section
4(f) (the "Conversion Price").
(c) Method of Conversion. In order to exercise such conversion privilege,
the holder of any Class C Preferred to be converted shall present and surrender
the certificate(s) representing such Class C Preferred during usual business
hours at any office or agency of the Corporation maintained for the transfer of
Class C Preferred and shall deliver a written notice of its election to convert
the Class C Preferred represented by such certificate(s), or any portion
thereof, specified in such notice. Such notice shall also state the name or
names (with address) in which the certificate or certificates for Common Stock
issuable on such conversion shall be issued. If so required by the Corporation,
any certificate for Class C Preferred surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder of such Class C Preferred or such holder's duly
authorized representative. Each conversion of Class C Preferred shall be deemed
to have been effected on the date (the "Conversion Date") on which the
certificate or certificates representing such Class C Preferred shall have been
surrendered and any required notice and instruments of transfer received as
aforesaid. Subject to the provisions of Section 4(f)(ix), the person or persons
in whose name or names any certificate or certificates for
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Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of such Common Stock immediately prior to
the close of business on the Conversion Date. Subject to the provisions of
Section 4(f)(ix), as promptly as practicable (and in any event within two (2)
business days) after the presentation and surrender for conversion, as herein
provided, of any certificate for Class C Preferred, the Corporation shall issue
and deliver at such office or agency, to or upon the written order of the holder
thereof, a certificate or certificates for the number of shares of Common Stock
issuable upon such conversion. In case any certificate for Class C Preferred
shall be surrendered for conversion of less than all of the Class C Preferred
represented thereby, the Corporation shall deliver at such office or agency, to
or upon the written order of the holder thereof, a certificate or certificates
for the number of Class C Preferred represented by such surrendered certificate
which are not converted. The issuance of certificates for Common Stock issuable
upon the conversion of Class C Preferred, and the issuance of certificates
representing Class C Preferred which are not converted as described above, shall
be at the Corporation's expense and without charge to the converting holder for
any tax imposed on the Corporation in respect of the issue thereof. The
Corporation shall not, however, be required to pay any tax which may be payable
with respect to any transfer involved in the issue and delivery of any
certificate in a name other than that of the holder of the Class C Preferred and
the Corporation shall not be required to issue or deliver any such certificate
unless and until the person requesting the issue thereof shall have paid to the
Corporation the amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(d) No Adjustment for Dividends. With respect to any conversion of Class C
Preferred into Common Stock pursuant to this Section 4, no adjustment shall be
made for dividends declared but as yet unpaid on the Class C Preferred as of any
record date prior to the Conversion Date; provided, however, that upon the
conversion of such Class C Preferred, the dividend declared but as yet unpaid on
the Class C Preferred shall be payable on the Common Stock issued upon such
conversion as if such Common Stock were outstanding as of the record date for
the determination of holders entitled to receive said dividend.
(e) Fractional Shares. If more than one Class C Preferred share shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Class C Preferred shares so surrendered. If any
fractional interest in a share of Common Stock would be deliverable upon the
conversion of any Class C Preferred, the Corporation shall issue a certificate
which shall evidence and include such fractional interest in the share of Common
Stock.
(f) Conversion Price Adjustments. The Conversion Price for the Class C
Preferred shall be subject to adjustment from time to time as follows:
(i) Common Stock Issued at Less Than the Conversion Price. In the
event that the Corporation shall issue Additional Common Shares (as defined
in Article 4, Section C. 4(f)(i) of this Amended and Restated Certificate
of Incorporation) without consideration or for a consideration per share
less than the Conversion Price in effect immediately prior to such
issuance, and a holder of
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Class C Preferred shall have participated pro-rata on an As Converted Basis
in such financing (the "Participating Holder"), the Conversion Price in
effect immediately prior to each such issuance for the Participating
Holder's Class C Preferred shall be reduced to the lowest price per share
at which such Additional Common Shares shall have been issued.
For the purposes of any adjustment of the Conversion Price
pursuant to Section 4(f), the following provisions shall be applicable:
(A) Cash. In the case of the issuance of Common Stock for cash,
the amount of the consideration received by the Corporation shall be
deemed to be the amount of the cash proceeds received by the
Corporation for such Common Stock before deducting therefrom any
reasonable discounts, commissions, taxes or other expenses allowed,
paid or incurred by the Corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the issuance of
Common Stock (other than upon the conversion of shares of capital
stock or other securities of the Corporation) for a consideration in
whole or in part other than cash, including securities acquired in
exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be
the fair value thereof (as determined in good faith by the Board of
Directors of the Corporation, whose determination shall be conclusive
to the extent reasonable), irrespective of any accounting treatment;
provided, that such fair value as determined by the Board of Directors
shall not exceed the aggregate Current Market Price (as defined in
Section 4(g)) of the Common Stock being issued as of the date the
Board of Directors authorizes the issuance of such Common Stock.
(C) Options and Convertible Securities. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable) other
than Excluded Shares, (ii) securities by their terms convertible into
or exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or (iii) options, warrants or rights to
purchase such convertible or exchangeable securities (whether or not
at the time exercisable):
(1) the aggregate maximum number of shares of Common Stock
deliverable upon exercise of such options, warrants or other
rights to purchase or acquire Common Stock shall be deemed to
have been issued at the time such options, warrants or other
rights become exercisable and for a consideration equal to the
consideration (determined in the manner provided in Sections
4(f)(iii)(A) and (B)), if any, received by the Corporation upon
the issuance of such options, warrants or other rights plus the
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minimum purchase price provided in such options, warrants or
other rights for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities, or upon the exercise of
options, warrants or other rights to purchase or acquire such
convertible or exchangeable securities and the subsequent
conversion or exchange thereof, shall be deemed to have been
issued at the time such securities become convertible or
exchangeable or such options, warrants or other rights become
exercisable and for a consideration equal to the consideration,
if any, received by the Corporation for any such securities and
related options, warrants or other rights (excluding any cash
received on account of accrued interest or accrued dividends),
plus the additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such securities
and the exercise of any related options, warrants or other rights
(the consideration in each case to be determined in the manner
provided in Sections 4(f)(iii)(A) and (B));
(3) on any change in the number of shares of Common Stock
deliverable upon exercise of any such options, warrants or other
rights which have become exercisable or conversion of or exchange
of such convertible or exchangeable securities which have become
convertible or exchangeable, or any change in the consideration
to be received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change resulting
from any subdivision, split-up, combination or reclassification
thereof, the Conversion Price as then in effect shall forthwith
be readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options, warrants
or other rights not exercised becoming exercisable prior to such
change, or securities not converted or exchanged becoming
convertible or exchangeable prior to such change, upon the basis
of such change but only if as a result of such adjustment the
Conversion Price then in effect is thereby reduced;
(4) on the expiration or cancellation of any such options,
warrants or other rights, or the termination of the right to
convert or exchange such convertible or exchangeable securities,
if the Conversion Price shall have been adjusted upon such
becoming exercisable, convertible or exchangeable, such
Conversion Price shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment been made
upon such options, warrants or other rights becoming exercisable
or securities becoming convertible or exchangeable on the basis
of the issuance of only the number of shares of Common Stock
actually issued
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upon the exercise of such options, warrants or other rights, or
upon the conversion or exchange of such securities; and
(5) if the Conversion Price shall have been adjusted upon
such options, warrants or other rights becoming exercisable or
such convertible or exchangeable securities becoming convertible
or exchangeable, no further adjustment of the Conversion Price
shall be made for the actual issuance of Common Stock upon the
exercise, conversion or exchange thereof.
(ii) Excluded Shares. "Excluded Shares" has the meaning given to it in
Article 4, Section C. 4(f)(ii) of this Amended and Restated Certificate of
Incorporation.
(iii) Stock Dividends; Stock Splits, Etc. If the number of shares of
Common Stock outstanding at any time after the date of issuance of the
Class C Preferred is increased by a stock dividend payable in Common Stock
or by a subdivision or split-up of Common Stock, then immediately after the
record date fixed for the determination of holders of Common Stock entitled
to receive such stock dividend or the effective date of such subdivision or
split-up, as the case may be, the Conversion Price shall be appropriately
adjusted so that the holder of any Class C Preferred thereafter converted
shall be entitled to receive the number of shares of Common Stock of the
Corporation which such holder would have owned immediately following such
action had such Class C Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date of issuance of the Class C Preferred
is decreased by a combination of the outstanding Common Stock, then
immediately after the effective date of such combination, the Conversion
Price shall be appropriately increased so that the holder of any Class C
Preferred thereafter converted shall be entitled to receive the number of
shares of Common Stock of the Corporation which such holder would have
owned immediately following such action had such Class C Preferred been
converted immediately prior thereto.
(v) Reorganizations, Etc. In the case of any capital reorganization of
the Corporation, any reclassification of Common Stock, the consolidation of
the Corporation with or the merger of the Corporation with or into any
other entity (other than a reorganization or merger solely for the purpose
of the change in the state of incorporation of the Corporation) or the
sale, lease or other transfer of all or substantially all of the assets of
the Corporation to any other person or entity, each Class C Preferred shall
after such capital reorganization, reclassification, consolidation, merger,
sale, lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common Stock
issuable (at the time of such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer) upon conversion of
such Class C Preferred would have been entitled upon such capital
reorganization, reclassification, consolidation, merger, sale, lease or
other transfer (taking into
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account any adjustment pursuant to Section 4(f)(ii)); and in any such case,
if necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the holders of the Class C Preferred shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably
be possible, to any shares of capital stock or other securities or property
thereafter deliverable on the conversion of the Class C Preferred. The
subdivision or combination of Common Stock issuable upon conversion of
Class C Preferred at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value) shall not be
deemed to be a reclassification of the Common Stock of the Corporation for
the purposes of this Section 4(f)(vii).
(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons or
assets (excluding cash dividends or dividends payable solely in Common
Stock) then, in each such case, each holder of Class C Preferred shall be
entitled to receive a proportionate share of any such distribution as if it
had converted into the number of shares of Common Stock of the Corporation
into which its Class C Preferred would have been convertible as of the
record date fixed for the determination of the holders of outstanding
shares of Common Stock of the Corporation entitled to receive such
distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All calculations
under this Section 4(f) shall be made to the nearest cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of
this Section 4 to the contrary notwithstanding, no adjustment in the
Conversion Price shall be made if the amount of such adjustment would be
less than one cent ($0.01), but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the time of, and
together with, any subsequent adjustment which, together with such amount
and any other amount or amounts so carried forward, shall aggregate one
cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Shares Upon Certain
Adjustments. In any case in which the provisions of this Section 4(f) shall
require that an adjustment shall become effective immediately after the
record date for an event, the Corporation may defer until the occurrence of
such event the issuing to the holder of any Class C Preferred converted
after such record date and before the occurrence of such event the
Additional Common Shares issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock issuable
upon such conversion before giving effect to such adjustment; provided,
that the Corporation upon request shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to receive
such additional shares upon the occurrence of the event requiring such
adjustment.
(ix) Applicable Adjustment. In any case in which the provisions of
this Section 4(f) shall require an adjustment to the Conversion Price for
the Class C Preferred, the applicable adjustment shall be the largest
adjustment lowering the
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Conversion Price resulting from the application of any appropriate
provision of this Section 4(f) to such event.
(g) Current Market Price. "Current Market Price" shall have the
meaning given in Article 4, Section C. 4.(g) of this Amended and Restated
Certificate of Incorporation; provided, that, if within fifteen (15) days
of receiving notice of an event under Section 4(f) requiring the
calculation of the Current Market Price a holder of at least ten percent
(10%) of the currently outstanding Class C Preferred requests the
appointment of an independent appraiser, the Board of Directors shall,
within ten (10) days of such request, appoint as an independent appraiser a
nationally-known independent public accounting firm or investment bank and
the Board of Directors shall direct such independent appraiser to conduct
an appraisal and make a report on the Current Market Price of a share of
Common Stock within thirty (30) days of its appointment. The determination
of Current Market Price by such independent appraiser shall be final and
binding upon the Corporation and the holders of Class C Preferred. The
costs of such independent appraiser shall be paid by the Corporation. Any
independent appraiser so utilized shall agree to treat all information
supplied by the Corporation in a confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price
in accordance with this Section 4 and shall prepare a certificate
signed by the Treasurer of the Corporation setting forth the adjusted
Conversion Price and the facts requiring such adjustment, and such
certificate shall forthwith be filed at the office of the transfer
agent or agents, if any, for the Class C Preferred and at the
principal office of the Corporation; and
(ii) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price and the facts
requiring such adjustment shall, as soon as practicable, be mailed to
the holders of record of the outstanding Class C Preferred. Where
appropriate, such notice may be given in advance and may be included
as part of a notice required to be mailed under the provisions of
Section 4(j).
(i) Cancellation. All Class C Preferred which shall have been
surrendered for conversion as herein provided in this Section 4 shall no
longer be deemed to be outstanding and all rights with respect to such
Class C Preferred, including the rights, if any, to receive notices and to
vote, shall forthwith cease and terminate, except only the right of the
holders thereof to receive Common Stock or other assets or property in
exchange therefor.
(j) Notice to Holders. In the event that:
(i) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
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(ii) the Corporation shall take action to offer for subscription
pro rata to the holders of any class of its capital stock securities
of any kind;
(iii) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the
Corporation (other than a subdivision, split-up or combination of its
Common Stock), or consolidation or merger to which the Corporation is
a party and for which approval of any stockholders of the Corporation
is required, or the sale or transfer of all or substantially all of
the assets of the Corporation; or
(iv) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of
the Corporation; then the Corporation shall (x) in case of any such
distribution, dividend or offering of subscription rights, at least
ten (10) days prior to the date or expected date on which the books of
the Corporation shall close or a record shall be taken for the
determination of holders entitled to such distribution or subscription
rights, and (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, at least ten (10) days prior to the date or
expected date when the same shall take place, cause written notice
thereof to be mailed to each holder of Class C Preferred at such
holder's address as shown on the books of the Corporation. The notice
to be given in accordance with this Section 4(j) shall also specify
(x) the date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled thereto, and (y) the
date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled to exchange their shares
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, as the case may be.
(k) Reservation of Shares. The Corporation shall at all times reserve
and keep available, free from preemptive rights, out of its treasury shares
or its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Class C Preferred, the full number of shares of
Common Stock then deliverable upon the conversion of all Class C Preferred
then outstanding.
(l) Reclassification of Common Stock. For the purposes of this Section
4, the term "Common Stock" shall mean (i) the class of stock designated as
the Common Stock of the Corporation on the date this Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of
Delaware, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of
changes in par value or from no par value to par value, or from par value
to no par value. If at any time as a result of an adjustment made pursuant
to the provisions of Section 4(f)(v), the holder of any Class C Preferred
thereafter surrendered for conversion shall become entitled to receive any
shares of the Corporation other than shares of Common Stock, and the number
of such other shares so receivable upon conversion of any Class C Preferred
shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Common
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Stock contained in Section 4(f)(v), and the other provisions of this
Section 4 with respect to the Common Stock shall apply on like terms to any
such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale or
other disposition of any Common Stock of the Corporation theretofore held
in its treasury shall be deemed to be an issuance thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose of
conversion of Class C Preferred requires registration with or approval of
any governmental authority under any Federal or state law or of the NASDAQ
System before such shares may be validly issued or delivered upon
conversion, the Corporation will in good faith and as expeditiously as
possible secure such registration or approval, as the case may be. If, and
so long as, any Common Stock into which the Class C Preferred are then
convertible are listed on any national securities exchange, the Corporation
will, if permitted by the rules of such exchange, list and keep listed on
such exchange, upon official notice of issuance, all of such Common Stock
issuable upon conversion.
(o) Valid Issuance. All Common Stock that may be issued upon
conversion of the Class C Preferred will upon issuance by the Corporation
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof, and the
Corporation shall take no action which will cause a contrary result
(including, without limitation, any action which would cause the Conversion
Price to be less than the par value, if any, of the Common Stock).
F. TERMS OF CLASS D CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the shares of
the Class D Preferred. Except as otherwise expressly provided in this Section F
of this Article Fourth ("Section F"), references to "Sections" in this Section F
shall be references to Sections within this Section F.
CLASS D CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class D Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class D Preferred shall be entitled to cast the number of
votes which it would have had the right to cast had all of its or his Class
D Preferred been converted, as provided in Section 4, into Common Stock
("As Converted Basis") as of the record date of the meeting at which such
votes are to be cast or as of the date any written consent is taken,
including any fraction of a share of Common Stock into which a holder's
Class D Preferred would be convertible. Holders of Class D Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class D Preferred shall be entitled to notice
of all meetings or actions of stockholders.
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(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class D Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of at least seventy-five percent (75%) of the then
outstanding Convertible Preferred Shares, voting as a single class on an As
Converted Basis, and such further affirmative vote, if any, of the holders
of any class of preferred shares as may be otherwise required by the laws
of the State of Delaware or this Amended and Restated Certificate of
Incorporation:
(i) amend this Amended and Restated Certificate of Incorporation
or the By-laws of the Corporation in any manner that would or could
prejudice the rights of the holders of the Class D Preferred Stock,
including any such amendment (or similar effect which would occur by
virtue of the merger or consolidation of the Corporation) that does
any of the following:
(A) increases or decreases the par value of the issued
Convertible Preferred Shares;
(B) changes issued Convertible Preferred Shares into a
lesser number of shares of the same class or into the same or a
different number of shares of any other class, with or without
par value, theretofore or then authorized;
(C) changes the terms, or adds terms, of the Convertible
Preferred Shares in any manner prejudicial to the holders of such
shares;
(D) changes the terms of issued shares of any class senior,
junior, or pari passu to the Convertible Preferred Shares in any
manner prejudicial to the holders of Convertible Preferred
Shares;
(E) authorizes shares of another class that are convertible
into, or authorizes the conversion of shares of another class
into, Convertible Preferred Shares or authorizes the Directors to
fix or alter conversion rights of shares of another class that
are convertible into Convertible Preferred Shares;
(F) provides, in the case of an amendment described in
Section 1(b)(i)(A) or (B), that the stated capital of the
Corporation shall be reduced or eliminated as a result of the
amendment, or provides, in the case of Section 1(b)(i)(E), that
the stated capital of the Corporation shall be reduced or
eliminated upon the exercise of such conversion rights, provided
that any such reduction or elimination is consistent with Section
244 of the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation,
or provides that thereafter an amendment to this Amended and
Restated Certificate of Incorporation may be adopted that changes
substantially the purposes of the Corporation; or
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(H) changes the Corporation into a nonprofit corporation.
(ii) Authorize, issue or sell or obligate itself to authorize,
issue or sell any class of its capital stock or other securities
(including debt securities) convertible into or exercisable for any
equity security which ranks senior or pari passu in right, either as
to voting, dividends or upon liquidation, with the Convertible
Preferred Shares.
(c) Notwithstanding anything herein to the contrary contained in
Section 1(a) or (b), so long as any Group I Preferred Stock remains
outstanding, the Corporation shall not, without the affirmative vote of at
least seventy-five percent (75%) of the then outstanding Group I Preferred
Stock, on an As Converted Basis, effect (i) any sale, lease, assignment,
transfer or other conveyance of all or substantially all of the assets or
capital stock of the Corporation, (ii) any recapitalization,
reclassification, reorganization or any similar transaction with respect to
any of its shares of capital stock, (iii) any consolidation or merger
involving the Corporation, or (iv) effect any transaction or series of
related transactions in which more than fifty percent (50%) of the voting
power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class D Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable when and if declared
by the Board of Directors of the Corporation out of funds legally available
therefor annually, prior and in preference to any declaration or payment of
any dividend on the Common Stock, in arrears on the first day of January of
each year. The dividends provided for in this Section 2(a) shall not be
cumulative.
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class D Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock;
provided, that for the purpose of determining the amount of any such
dividend payable to the holders of Class D Preferred, such holders shall be
entitled to receive a proportionate amount of such dividends as if all
issued and outstanding Class D Preferred had been converted into Common
Stock as of the record date for the determination of holders entitled to
receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and
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Common Stock will be entitled to receive from the Corporation's assets
available for distribution to stockholders, the amounts and preferences as
set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or distribution shall be made to the holders of Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E
Preferred, Class G Preferred, Blank Check Preferred or Common Stock or
shares of any class of capital stock of the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
dividends on such shares; the holders of Class D Preferred shall
receive cash in the amount of One and 35/100 Dollars ($1.35) per
share, plus an amount equal to declared but unpaid dividends on such
shares; the holders of Class E Preferred shall receive cash in the
amount of the Class E Liquidation Preference Amount; provided,
however, that except as provided in the next proviso, the aggregate
amount payable to the holders of Class E Preferred pursuant to this
Section 3(a)(ii) shall not exceed Five Million Dollars ($5,000,000);
provided, further, that if the holders of Class E Preferred shall have
purchased additional shares of Common Stock pursuant to the terms of
Section 1(h) of the Purchase Agreement, the aggregate amount set forth
in the immediately preceding proviso shall be increased by the
aggregate amount actually paid for such Common Stock; the holders of
Class G Preferred shall receive cash in the amount of One and 85/100
Dollars ($1.85) per share, plus an amount equal to declared but unpaid
dividends on such shares; and the holders of Blank Check Preferred
shall receive the liquidation preference which is set forth in the
Certificate of Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
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(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount payable to the holders of the Common Stock
pursuant to this Section 3(a)(v) exceed One Million One Hundred
Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i)-(vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay
the amounts payable under Section 3(a)(i) to the holders of all the
outstanding Class F Preferred, the holders of Class F Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, in the event
that the holders of the Class F Preferred shall have been paid all amounts
payable under Section 3(a)(i) but the Corporation has insufficient funds to
pay the amounts payable under Section 3(a)(ii) to the holders of all the
outstanding Class C Preferred, the holders of Class C Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, if, upon any
such event, the Corporation has insufficient funds to pay the amounts
payable under Section 3(a)(iii) to the holders of all the outstanding Group
II Preferred Stock, the holders of such Group II Preferred Stock shall
share ratably in any distribution of assets in proportion to the full
amounts to which they would otherwise be respectively entitled.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Corporation, nor the consolidation or
merger of the Corporation with or into any other corporation or
corporations, nor the consolidation or merger of any other corporation or
corporations with or into the Corporation, nor the reorganization of the
Corporation, shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3 if the
holders of at least fifty-one percent (51%) of the then outstanding
Convertible Preferred Shares and Class F Preferred
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together elect to have such events not deemed a liquidation of the
Corporation by giving written notice to the Corporation.
(c) After the payment in cash to the holders of Class D Preferred of
the full preferential amount fixed in accordance with the provisions of
Section 3(a) with respect to the outstanding Class D Preferred, the holders
of outstanding Class D Preferred as such will have no right or claim to any
of the remaining assets of the Corporation.
(d) In the event (i) the holders of the Class D Preferred vote to
convert their shares of Class D Preferred into Common Stock immediately
prior to or in connection with an event specified in Section 3(a) or (ii)
any holder of Class D Preferred otherwise converts their shares of Class D
Preferred into Common Stock in accordance with such holder's rights under
Section 4, the priorities and preferences set forth in Section 3(a) shall
be of no further effect and the holders of such Common Stock shall share
all of the assets of the Corporation available for distribution to all
holders of Common Stock ratably in proportion to the number of shares of
Common Stock held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class D Preferred
shall, subject to the terms and conditions hereinafter set forth, convert
such Class D Preferred into fully paid and nonassessable shares of Common
Stock at the Conversion Price (as hereinafter defined in Section 4(b)) in
effect on the Conversion Date (as defined in Section 4(c)), at the
following times and pursuant to the following conditions: (a) at any time,
at such stockholder's option; (b) automatically and simultaneously upon the
Closing of a Public Offering; or (c) upon the written notice to the
Corporation at the election by the holders of seventy-five percent (75%) of
the outstanding Class D Preferred, voting on an As Converted Basis.
(b) Conversion Price. Each Class D Preferred shall be convertible at
an office or agency referred to below into a number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to
the nearest one-hundredth (1/100th) of a share) as is determined by
dividing One and 35/100 Dollars ($1.35) by the Conversion Price in effect
on the Conversion Date. As of the date of this Amended and Restated
Certificate of Incorporation was filed with the Secretary of State of
Delaware, the price at which Common Stock shall initially be issuable upon
conversion shall be One and 35/100 Dollars ($1.35) per share, which price
may be adjusted from time to time as provided in Section 4(f) (the
"Conversion Price").
(c) Method of Conversion. In order to exercise such conversion
privilege, the holder of any Class D Preferred to be converted shall
present and surrender the certificate(s) representing such Class D
Preferred during usual business hours at any office or agency of the
Corporation maintained for the transfer of Class D Preferred and shall
deliver a written notice of its election to convert the Class D Preferred
represented by such certificate(s), or any portion thereof, specified in
such notice. Such notice shall also state the name or names (with address)
in which the certificate or certificates for Common Stock issuable on such
conversion shall be issued. If so required by the
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Corporation, any certificate for Class D Preferred surrendered for
conversion shall be accompanied by instruments of transfer, in form
satisfactory to the Corporation, duly executed by the holder of such Class
D Preferred or such holder's duly authorized representative. Each
conversion of Class D Preferred shall be deemed to have been effected on
the date (the "Conversion Date") on which the certificate or certificates
representing such Class D Preferred shall have been surrendered and any
required notice and instruments of transfer received as aforesaid. Subject
to the provisions of Section 4(f)(viii), the person or persons in whose
name or names any certificate or certificates for Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of such Common Stock immediately prior to the close of
business on the Conversion Date. Subject to the provisions of Section
4(f)(viii), as promptly as practicable after (and in any event within two
(2) business days) the presentation and surrender for conversion, as herein
provided, of any certificate for Class D Preferred, the Corporation shall
issue and deliver at such office or agency, to or upon the written order of
the holder thereof, a certificate or certificates for the number of shares
of Common Stock issuable upon such conversion. In case any certificate for
Class D Preferred shall be surrendered for conversion of less than all of
the Class D Preferred represented thereby, the Corporation shall deliver at
such office or agency, to or upon the written order of the holder thereof,
a certificate or certificates for the number of Class D Preferred
represented by such surrendered certificate which are not converted. The
issuance of certificates for Common Stock issuable upon the conversion of
Class D Preferred, and the issuance of certificates representing Class D
Preferred which are not converted as described above, shall be at the
Corporation's expense and without charge to the converting holder for any
tax imposed on the Corporation in respect of the issue thereof. The
Corporation shall not, however, be required to pay any tax which may be
payable with respect to any transfer involved in the issue and delivery of
any certificate in a name other than that of the holder of the Class D
Preferred and the Corporation shall not be required to issue or deliver any
such certificate unless and until the person requesting the issue thereof
shall have paid to the Corporation the amount of such tax or has
established to the satisfaction of the Corporation that such tax has been
paid.
(d) No Adjustment for Dividends. With respect to any conversion of
Class D Preferred into Common Stock pursuant to this Section 4, no
adjustment shall be made for dividends declared but as yet unpaid on the
Class D Preferred as of any record date prior to the Conversion Date;
provided, however, that upon the conversion of such Class D Preferred, the
dividend declared but as yet unpaid on the Class D Preferred shall be
payable on the Common Stock issued upon such conversion as if such Common
Stock were outstanding as of the record date for the determination of
holders entitled to receive said dividend.
(e) Fractional Shares. If more than one Class D Preferred share shall
be surrendered for conversion at one time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Class D Preferred shares
so surrendered. If any fractional interest in a share of Common Stock would
be deliverable upon the conversion of any Class D Preferred, the
Corporation shall issue a certificate which shall evidence and include such
fractional interest in the share of Common Stock.
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(f) Conversion Price Adjustments. The Conversion Price for the Class D
Preferred shall be subject to adjustment from time to time as follows:
(i) Common Stock Issued at Less Than the Conversion Price. If the
Corporation shall issue or be deemed to have issued any Common Stock
other than Excluded Shares (as defined in Article 4, Section C.
4(f)(ii) of this Amended and Restated Certificate of Incorporation)
without consideration or for a consideration per share less than the
Conversion Price in effect immediately prior to such issuance, the
Conversion Price in effect immediately prior to each such issuance
shall be reduced to a price determined by multiplying the then current
Conversion Price by a fraction (A) the numerator of which shall be the
sum of (1) the number of shares of Common Stock outstanding
immediately prior to such issuance, plus (2) the number of shares of
Common Stock that the aggregate consideration received by the Company
for the total number of Additional Common Shares so issued would
purchase at such Conversion Price, and (B) the denominator of which
shall be the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of Additional Common Shares so
issued.
For the purposes of any adjustment of the Conversion Price
pursuant to this Section 4(f)(i), the following provisions shall be
applicable:
(A) Cash. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Corporation
shall be deemed to be the amount of the cash proceeds received by
the Corporation for such Common Stock before deducting therefrom
any reasonable discounts, commissions, taxes or other expenses
allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (other than upon the conversion of
shares of capital stock or other securities of the Corporation)
for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration
other than cash shall be deemed to be the fair value thereof (as
determined in good faith by the Board of Directors of the
Corporation, whose determination shall be conclusive to the
extent reasonable), irrespective of any accounting treatment;
provided, that such fair value as determined by the Board of
Directors shall not exceed the aggregate Current Market Price (as
defined in Section 4(g)) of the Common Stock being issued as of
the date the Board of Directors authorizes the issuance of such
Common Stock.
(C) Options and Convertible Securities. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable)
other than Excluded Shares, (ii) securities by their terms
convertible into or
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exchangeable for Common Stock (whether or not at the time so
convertible or exchangeable) or (iii) options, warrants or rights
to purchase such convertible or exchangeable securities (whether
or not at the time exercisable):
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall be
deemed to have been issued at the time such options,
warrants or other rights become exercisable and for a
consideration equal to the consideration (determined in the
manner provided in Sections 4(f)(i)(A) and (B)), if any,
received by the Corporation upon the issuance of such
options, warrants or other rights plus the minimum purchase
price provided in such options, warrants or other rights for
the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed
to have been issued at the time such securities become
convertible or exchangeable or such options, warrants or
other rights become exercisable and for a consideration
equal to the consideration, if any, received by the
Corporation for any such securities and related options,
warrants or other rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities and the exercise of any related options, warrants
or other rights (the consideration in each case to be
determined in the manner provided in Sections 4(f)(i)(A) and
(B));
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options,
warrants or other rights which have become exercisable or
conversion of or exchange of such convertible or
exchangeable securities which have become convertible or
exchangeable, or any change in the consideration to be
received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change
resulting from any subdivision, split-up, combination or
reclassification thereof, the Conversion Price as then in
effect shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment been
made upon such options, warrants or other rights not
exercised becoming exercisable prior to such change, or
securities not converted or exchanged becoming convertible
or exchangeable prior to such change, upon the basis of
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such change but only if as a result of such adjustment the
Conversion Price then in effect is thereby reduced;
(4) on the expiration or cancellation of any such
options, warrants or other rights, or the termination of the
right to convert or exchange such convertible or
exchangeable securities, if the Conversion Price shall have
been adjusted upon such becoming exercisable, convertible or
exchangeable, such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options,
warrants or other rights becoming exercisable or securities
becoming convertible or exchangeable on the basis of the
issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants
or other rights, or upon the conversion or exchange of such
securities; and
(5) if the Conversion Price shall have been adjusted
upon such options, warrants or other rights becoming
exercisable or such convertible or exchangeable securities
becoming convertible or exchangeable, no further adjustment
of the Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise, conversion or
exchange thereof.
(ii) Excluded Shares. "Excluded Shares" has the meaning given to
it in Article 4, Section C. 4(f)(ii) of this Amended and Restated
Certificate of Incorporation.
(iii) Stock Dividends; Stock Splits, Etc. If the number of shares
of Common Stock outstanding at any time after the date of issuance of
the Class D Preferred is increased by a stock dividend payable in
Common Stock or by a subdivision or split-up of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately adjusted so that the
holder of any Class D Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class D Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date of issuance of the Class
D Preferred is decreased by a combination of the outstanding Common
Stock, then immediately after the effective date of such combination,
the Conversion Price shall be appropriately increased so that the
holder of any Class D Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class D Preferred been converted immediately prior thereto.
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(v) Reorganizations, Etc. In the case of any capital reorganization of
the Corporation, any reclassification of Common Stock, the consolidation of
the Corporation with or the merger of the Corporation with or into any
other entity (other than a reorganization or merger solely for the purpose
of the change in the state of incorporation of the Corporation) or the
sale, lease or other transfer of all or substantially all of the assets of
the Corporation to any other person or entity, each Class D Preferred shall
after such capital reorganization, reclassification, consolidation, merger,
sale, lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common Stock
issuable (at the time of such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer) upon conversion of
such Class D Preferred would have been entitled upon such capital
reorganization, reclassification, consolidation, merger, sale, lease or
other transfer; and in any such case, if necessary, the provisions set
forth herein with respect to the rights and interests thereafter of the
holders of the Class D Preferred shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be possible, to any shares of
capital stock or other securities or property thereafter deliverable on the
conversion of the Class D Preferred. The subdivision or combination of
Common Stock issuable upon conversion of Class D Preferred at any time
outstanding into a greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for the purposes of
this Section 4(f)(v).
(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons or
assets (excluding cash dividends or dividends payable solely in Common
Stock) then, in each such case, each holder of Class D Preferred shall be
entitled to receive a proportionate share of any such distribution as if it
had converted into the number of shares of Common Stock of the Corporation
into which its Class D Preferred would have been convertible as of the
record date fixed for the determination of the holders of outstanding
shares of Common Stock of the Corporation entitled to receive such
distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All calculations
under this Section 4(f) shall be made to the nearest cent or to the nearest
one-hundredth (1/100th) of a share, as the case may be. Any provision of
this Section 4 to the contrary notwithstanding, no adjustment in the
Conversion Price shall be made if the amount of such adjustment would be
less than one cent ($0.01), but any such amount shall be carried forward
and an adjustment with respect thereto shall be made at the time of, and
together with, any subsequent adjustment which, together with such amount
and any other amount or amounts so carried forward, shall aggregate one
cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Shares Upon Certain
Adjustments. In any case in which the provisions of this Section 4(f) shall
require that an adjustment shall become effective immediately after the
record date for an event, the Corporation may defer until the occurrence of
such event the issuing to
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the holder of any Class D Preferred converted after such record date and
before the occurrence of such event the Additional Common Shares issuable
upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment; provided, that the Corporation upon request
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(ix) Applicable Adjustment. In any case in which the provisions of
this Section 4(f) shall require an adjustment to the Conversion Price for
the Class D Preferred, the applicable adjustment shall be the largest
adjustment lowering the Conversion Price resulting from the application of
any appropriate provision of this Section 4(f) to such event.
(g) Current Market Price. "Current Market Price" shall have the meaning
given in Article 4, Section C. 4.(g) of this Amended and Restated Certificate of
Incorporation; provided, that, if within fifteen (15) days of receiving notice
of an event under Section 4(f) requiring the calculation of the Current Market
Price a holder of at least ten percent (10%) of the currently outstanding Class
D Preferred requests the appointment of an independent appraiser, the Board of
Directors shall, within ten (10) days of such request, appoint as an independent
appraiser a nationally-known independent public accounting firm or investment
bank and the Board of Directors shall direct such independent appraiser to
conduct an appraisal and make a report on the Current Market Price of a Share of
Common Stock within thirty (30) days of its appointment. The determination of
Current Market Price by such independent appraiser shall be final and binding
upon the Corporation and the holders of Class D Preferred. The costs of such
independent appraiser shall be paid by the Corporation. Any independent
appraiser so utilized shall agree to treat all information supplied by the
Corporation in a confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price in
accordance with this Section 4 and shall prepare a certificate signed by
the Treasurer of the Corporation setting forth the adjusted Conversion
Price and the facts requiring such adjustment, and such certificate shall
forthwith be filed at the office of the transfer agent or agents, if any,
for the Class D Preferred and at the principal office of the Corporation;
and
(ii) a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price and the facts requiring such
adjustment shall, as soon as practicable, be mailed to the holders of
record of the outstanding Class D Preferred. Where appropriate, such notice
may be given in advance and may be included as part of a notice required to
be mailed under the provisions of this Section 4(j).
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(i) Cancellation. All Class D Preferred which shall have been surrendered
for conversion as herein provided in this Section 4 shall no longer be deemed to
be outstanding and all rights with respect to such Class D Preferred, including
the rights, if any, to receive notices and to vote, shall forthwith cease and
terminate, except only the right of the holders thereof to receive Common Stock
or other assets or property in exchange therefor.
(j) Notice to Holders. In the event that:
(a) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
(b) the Corporation shall take action to offer for subscription pro
rata to the holders of any class of its capital stock securities of any
kind;
(c) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the Corporation
(other than a subdivision, split-up or combination of its Common Stock), or
consolidation or merger to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or the sale or
transfer of all or substantially all of the assets of the Corporation; or
(d) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Corporation;
then the Corporation shall (x) in case of any such distribution, dividend or
offering of subscription rights, at least ten (10) days prior to the date or
expected date on which the books of the Corporation shall close or a record
shall be taken for the determination of holders entitled to such distribution or
subscription rights, and (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, at least ten (10) days prior to the date or expected
date when the same shall take place, cause written notice thereof to be mailed
to each holder of Class D Preferred at such holder's address as shown on the
books of the Corporation. The notice to be given in accordance with this Section
4(j) shall also specify (x) the date or expected date on which the holders of
any class of the Corporation's capital stock shall be entitled thereto, and (y)
the date or expected date on which the holders of any class of the Corporation's
capital stock shall be entitled to exchange their shares for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, as the case may
be.
(k) Reservation of Shares. The Corporation shall at all times reserve and
keep available, free from preemptive rights, out of its treasury shares or its
authorized but unissued Common Stock, for the purpose of effecting the
conversion of the Class D Preferred, the full number of shares of Common Stock
then deliverable upon the conversion of all Class D Preferred then outstanding.
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(l) Reclassification of Common Stock. For the purposes of this Section 4,
the term "Common Stock" shall mean (a) the class of stock designated as the
Common Stock of the Corporation on the date this Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of Delaware,
or (b) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par value
or from no par value to par value, or from par value to no par value. If at any
time as a result of an adjustment made pursuant to the provisions of Section
4(f)(v), the holder of any Class D Preferred thereafter surrendered for
conversion shall become entitled to receive any shares of the Corporation other
than Common Stock, and the number of such other shares so receivable upon
conversion of any Class D Preferred shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in Section 4(f)(v), and
the other provisions of this Section 4 with respect to the Common Stock shall
apply on like terms to any such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale or other
disposition of any Common Stock of the Corporation theretofore held in its
treasury shall be deemed to be an issuance thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose of
conversion of Class D Preferred requires registration with or approval of any
governmental authority under any Federal or state law or of the NASDAQ System
before such shares may be validly issued or delivered upon conversion, the
Corporation will in good faith and as expeditiously as possible secure such
registration or approval, as the case may be. If, and so long as, any Common
Stock into which the Class D Preferred are then convertible are listed on any
national securities exchange, the Corporation will, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all of such Common Stock issuable upon conversion.
(o) Valid Issuance. All Common Stock that may be issued upon conversion of
the Class D Preferred will upon issuance by the Corporation be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof, and the Corporation shall take no action
which will cause a contrary result (including, without limitation, any action
which would cause the Conversion Price to be less than the par value, if any, of
the Common Stock).
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G. TERMS OF CLASS E CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the shares of
the Class E Preferred. Except as otherwise expressly provided in this Section G
of this Article Fourth ("Section G"), references to "Sections" in this Section G
shall be references to Sections within this Section G.
CLASS E CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
1. Voting Rights.
(a) Except as expressly provided in Sections 1(b) and 1(c), holders of
Class E Preferred shall not have any voting rights on any matter submitted
to a vote of stockholders of the Corporation and shall not otherwise be
entitled to vote together with holders of Common Stock, including with
respect to the election of Directors of the Corporation.
(b) Subject to the rights of any class of Preferred Stock that may
from time to time come into existence, so long as any shares of Class E
Preferred are outstanding, the Corporation shall not without first
obtaining the approval of the holders of at least a majority of the
then-outstanding shares of Class E Preferred, voting separately as a class:
(i) other than as provided in Section 1(c), amend this Amended
and Restated Certificate of Incorporation so as to affect adversely
the shares of Class E Preferred or any holder thereof; or
(ii) amend this Section G in any other respect.
(c) So long as any shares of Class E Preferred are outstanding, the
Corporation shall not without first obtaining the approval of the holders
of at least a majority of the then-outstanding shares of Preferred Stock,
voting together as a class on an As Converted Basis, authorize, issue or
sell or obligate itself to authorize, issue or sell any class of its
capital stock convertible into or exercisable for any equity security which
ranks senior or pari passu in right, either as to voting, dividends or upon
liquidation, with the Class E Preferred Shares.
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2. Dividend Rights.
(a) The Class E Preferred, for a period of six years from the date of
first issuance of the Class E Preferred, shall be entitled a dividend equal
to 7% per annum. Such dividend shall (i) be cumulative, (ii) compound on an
annual basis, the first compounding to commence one year from the date of
the first issuance of the Class E Preferred, (iii) be payable, at the
option of the Corporation, at the time of conversion of the Class E
Preferred pursuant to Section 4, (A) by the issuance of additional shares
of Class E Preferred, at a price per share equal to the Original Issue
Price thereof (as defined in this Section 2) or (B) in cash, (iv) be
payable only upon conversion of the Class E Preferred, and (v) be canceled
upon exchange of the Class E Preferred pursuant to Section 5. The "Original
Issue Price" per share of Class E Preferred equals $1,000, as appropriately
adjusted for any stock split, stock dividend paid in Class E Preferred or
subdivision or split up of such shares. Fractional shares of Class E
Preferred shall be issuable for purposes of this Section 2(a).
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class E Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock in
the same form as such Common Stock dividends; provided, that for the
purposes of determining the amount of any such dividend payable to the
holders of Class E Preferred, such holders shall be entitled to receive a
proportionate amount of such dividends as if all issued and outstanding
Class E Preferred had been converted into Common Stock as of the record
date for the determination of holders entitled to receive said dividend. In
the event of an IPO, the Corporation may, at its option, pay any accrued
and unpaid dividends in Common Stock, which Common Stock shall be valued
for this purpose at the price per share paid by the public.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and Common Stock will be entitled to receive
from the Corporation's assets available for distribution to stockholders,
the amounts and preferences as set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or
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distribution shall be made to the holders of Class A Preferred, Class
B Preferred, Class C Preferred, Class D Preferred, Class E Preferred,
Class G Preferred, Blank Check Preferred or Common Stock or shares of
any class of capital stock of the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
dividends on such shares; the holders of Class D Preferred shall
receive cash in the amount of One and 35/100 Dollars ($1.35) per
share, plus an amount equal to declared but unpaid dividends on such
shares; the holders of Class E Preferred shall receive cash in the
amount of the Class E Liquidation Preference Amount; provided,
however, that except as provided in the next proviso, the aggregate
amount payable to the holders of Class E Preferred pursuant to this
Section 3(a)(ii) shall not exceed Five Million Dollars ($5,000,000);
provided, further, that if the holders of Class E Preferred shall have
purchased additional shares of Common Stock pursuant to the terms of
Section 1(h) of the Purchase Agreement, the aggregate amount set forth
in the immediately preceding proviso shall be increased by the
aggregate amount actually paid for such Common Stock; the holders of
Class G Preferred shall receive cash in the amount of One and 85/100
Dollars ($1.85) per share, plus an amount equal to declared but unpaid
dividends on such shares; and the holders of Blank Check Preferred
shall receive the liquidation preference which is set forth in the
Certificate of Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
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(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount payable to the holders of the Common Stock
pursuant to this Section 3(a)(v) exceed One Million One Hundred
Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i)-(vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay
the amounts payable under Section 3(a)(i) to the holders of all the
outstanding Class F Preferred, the holders of Class F Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, in the event
that the holders of the Class F Preferred shall have been paid all amounts
payable under Section 3(a)(i) but the Corporation has insufficient funds to
pay the amounts payable under Section 3(a)(ii) to the holders of all the
outstanding Class C Preferred, the holders of Class C Preferred shall share
ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled. Further, if, upon any
such event, the Corporation has insufficient funds to pay the amounts
payable under Section 3(a)(iii) to the holders of all the outstanding Group
II Preferred Stock, the holders of such Group II Preferred Stock shall
share ratably in any distribution of assets in proportion to the full
amounts to which they would otherwise be respectively entitled.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Corporation, nor the consolidation or
merger of the Corporation with or into any other corporation or
corporations, nor the consolidation or merger of any other corporation or
corporations with or into the Corporation, nor the reorganization of the
Corporation, shall be deemed a
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liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 3 if the holders of at least fifty-one
percent (51%) of the then outstanding Convertible Preferred Shares and
Class F Preferred together elect to have such events not deemed a
liquidation of the Corporation by giving written notice to the Corporation.
(c) After the payment in cash to the holders of Class E Preferred of
the full preferential amount fixed in accordance with the provisions of
Section 3(a) with respect to the outstanding Class E Preferred, the holders
of outstanding Class E Preferred as such will have no right or claim to any
of the remaining assets of the Corporation.
4. Conversion Rights. The holders of the Class E Preferred shall have
conversion rights, through and including the Conversion Termination Date (as
defined in Section 6(a)), as follows (the "Conversion Rights"):
(a) Conversion.
(i) The Class E Preferred shall be convertible in whole, but not
in part, in accordance with this Section 4(a), at the option of the
holders thereof, at any time after the third anniversary of the date
of issuance and prior to the Conversion Termination Date at the office
of the Corporation or any transfer agent for such stock, into such
number of fully paid and non-assessable shares of Common Stock as is
determined by dividing (x) the sum of the Original Issue Price and all
accrued and unpaid dividends thereon by (y) $19.80 (such quotient, the
"Conversion Price"); provided, however, that the Conversion Price for
the Class E Preferred shall be subject to adjustment as set forth in
Section 4(a)(iii).
(ii) Before the holders of Class E Preferred shall be entitled to
convert such shares into shares of Common Stock, such holders shall
surrender the certificate or certificates therefor, duly endorsed, at
the office of the Corporation or of any transfer agent for the Class E
Preferred, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The
Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holders of Class E Preferred, or to the
nominee or nominees of such holders, a certificate or certificates for
the number of shares of Common Stock to which such holders shall be
entitled as set forth above. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of
such surrender of the shares of Class E Preferred to be converted, and
the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such
date. The Corporation shall not be required to pay any tax which may
be payable with respect to any transfer involved in the issue
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and delivery of any certificate in a name other than that of the
holder of the Class E Preferred and the Corporation shall not be
required to issue or deliver any such certificate unless and until the
person requesting the issue thereof shall have paid to the Corporation
the amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(iii) In the event the Corporation should at any time fix a
record date for the effectuation of a split or subdivision of the
outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any
consideration by such holder for the additional shares of Common Stock
or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof) then, as of
such record date (or the date of such dividend distribution, split or
subdivision if no record date is fixed), the Conversion Price of the
Class E Preferred shall be appropriately decreased so that the number
of shares of Common Stock issuable on conversion of each share of such
class shall be increased in proportion to such increase of the
aggregate of (a) shares of Common Stock outstanding and (b) those
issuable with respect to such Common Stock Equivalents, with the
number of shares issuable with respect to Common Stock Equivalents
determined from time to time as provided in Section 4(a)(v).
(iv) If the number of shares of Common Stock outstanding at any
time is decreased by a combination of the outstanding shares of Common
Stock, then, following the record date of such combination, the
Conversion Price for the Class E Preferred shall be appropriately
increased so that the number of shares of Common Stock issuable on
conversion of each share of such class shall be decreased in
proportion to such decrease in outstanding shares.
(v) The following provisions shall apply for purposes of this
Section 4(a):
(A) The aggregate maximum number of shares of Common Stock
deliverable upon conversion or exercise of Common Stock
Equivalents (assuming the satisfaction of any conditions to
convertibility or exercisability, including, without limitation,
the passage of time, but without taking into account potential
antidilution adjustments) shall be deemed to have been issued at
the time such Common Stock Equivalents were issued.
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(B) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the
Corporation upon conversion or exercise of such Common Stock
Equivalents including, but not limited to, a change resulting
from the antidilution provisions thereof, the Conversion Price of
the Class E Preferred Stock, to the extent in any way affected by
or computed using such Common Stock Equivalents, shall be
recomputed to reflect such change, but no further adjustment
shall be made for the actual issuance of Common Stock or any
payment of such consideration upon the exercise of any such
options or rights or the conversion or exchange of such
securities.
(C) Upon the termination or expiration of the convertibility
or exercisability of any such Common Stock Equivalents, the
Conversion Price of the Class E Preferred Stock, to the extent in
any way affected by or computed using such Common Stock
Equivalents, shall be recomputed to reflect the issuance of only
the number of shares of Common Stock (and Common Stock
Equivalents which remain convertible or exercisable) actually
issued upon the conversion or exercise of such Common Stock
Equivalents.
(b) Automatic Conversion. The Class E Preferred shall automatically be
converted into shares of Common Stock at the Conversion Price upon the
earliest to occur prior to the Conversion Termination Date of: the time
immediately prior to the effective time of (x) the acquisition of the
Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation in which the Corporation is not the surviving
entity, but excluding any merger effected exclusively for the purpose of
changing the domicile of the Corporation); (y) the sale of all or
substantially all of the assets of the Corporation, unless the
Corporation's stockholders of record as constituted immediately prior to
such acquisition or sale will, immediately after such acquisition or sale
(by virtue of securities issued as consideration for the Corporation's
acquisition or sale or otherwise) hold at least fifty percent (50%) of the
voting power of the surviving entity in approximately the same relative
percentages after such acquisition or sale as before such acquisition or
sale; or (z) except as provided in Section 5(c), the initial public
offering of Common Stock, provided, that the Corporation shall have given
the holders of Class E Preferred notice that such event shall occur and
that the Corporation desires the Class E Preferred to be converted.
5. Exchange Right.
(a) Provided that (i) the Exchange Termination Date (as defined in
Section 6(b)) shall not have occurred and (ii) Elan International Services,
Ltd. ("EIS") and its affiliates are the holders of all of the shares of
Class E Preferred (or, upon automatic conversion of such stock into shares
of Common Stock, as set forth in Section 4(b)), such Common Stock
(collectively, with the Class E Preferred, the "Exchange Shares")), the
holders of the Exchange Shares (acting by act of the majority holders
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thereof) shall have the right, at any time after the second anniversary of
the date of issuance of the Class E Preferred, to exchange all, but not
less than all, of the Exchange Shares (the "Exchange Right") for the
greater of (i) 4,510 fully paid and nonassessable shares of common stock,
par value $1.00 per share ("Newco Common Stock"), of Athersys Newco, Ltd.
("Newco") (subject to adjustment for splits, stock dividends and similar
events occurring in respect of Newco Common Stock) owned by the
Corporation, or (ii) a number of shares of Newco Common Stock owned by the
Corporation that, after giving effect to the exercise of the Exchange
Right, would cause EIS and the Corporation to each hold 50% of the total
outstanding share capital of Newco (assuming that neither EIS nor the
Corporation has ever sold any shares of Newco and that Newco has not issued
or sold any shares of Newco to any third party), provided, however, that if
EIS or the Corporation has ever sold any shares of Newco, or Newco has
issued or sold any shares of Newco, the provisions of clause (i) of this
Section 5(a) shall apply; provided, that EIS may exercise the Exchange
Right, prior to a date that is two years after the date of issuance of the
Class E Preferred, pursuant to an automatic conversion, in which case (i)
the shares of Newco stock to be transferred by the Corporation to EIS upon
exercise of the Exchange Right shall be shares of non-voting convertible
preferred stock of Newco of the same series as the preferred stock issued
to EIS on October 21, 1999 (the "Newco Preferred Stock") and (ii) EIS and
the Corporation shall cause Newco to convert an adequate number of shares
of Newco Common Stock held by the Corporation into shares of Newco
Preferred Stock for the purposes of effecting with the Exchange Right. The
Newco Preferred Stock shall be convertible into common shares of Newco on a
one-for-one basis, subject to adjustment for splits, stock dividends and
similar events occurring in respect of Newco Common Stock, at any time
after such two year period.
(b) Upon exercise of the Exchange Right, the Exchange Shares,
including all accrued and unpaid dividends thereon, shall be canceled and
shall no longer be entitled to any rights in the Corporation.
(c) The Exchange Shares shall be exchangeable for Newco Common Stock,
in whole, but not in part, in accordance with this Section 5, at any time
after the second anniversary of the date of issuance of the Class E
Preferred and prior to the Exchange Termination Date (as defined in Section
6(b)); provided, that the Exchange Right may be exercised (at the
discretion of EIS) prior to such two-year period in the event of (i) any
public offering of securities of the Company or Newco; (ii) any material
financing of Newco, including without limitation, the admission of
additional equity or shareholders in Newco (or the equivalent, including as
a result of the issuance of convertible, exchangeable or exercisable
securities); (iii) any disposition or acquisition (including by way of
license, sublicense or otherwise) of any material asset of Newco, (iv) any
merger, consolidation, material asset sale or acquisition or similar
transaction involving the Company or Newco or (v) any material change in
the business plan or lines of business of Newco. If the Class E Preferred
is converted pursuant to Section 4(a), to shares of Common Stock, the
Exchange Right with respect to all shares of Class E Preferred shall be
terminated and of no further force and effect.
(d) In order to exercise the Exchange Right, the holders of the
Exchange Shares shall provide written notice thereof to the Corporation,
setting forth (i) the fact that such holders intend to exercise the
Exchange Right, and (ii) the proposed date for
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such exercise (the "Exchange Date"), which shall be between 10 and 30 days
after the date of such notice, provided, however, that if the Corporation
shall deliver the holders of the Exchange Shares a written request to delay
the date for such exercise by no more than 45 days, the Exchange Date will
be as set forth in that request. During the period after the receipt of
such written request, and before the Exchange Date, the holders of the
Exchange Shares shall negotiate with the Corporation in good faith an
alternative mechanism for the transfer of the Newco Common Stock that will
reduce the Corporation's tax liability, provided that the holders of the
Exchange Shares shall not be required to agree to any transaction which is
financially disadvantageous to them. On the Exchange Date, (x) the holders
shall tender their shares of the Exchange Shares to the Corporation for
cancellation, and (y) the Corporation shall cause Newco to deliver to EIS,
acting on behalf of such holders, such shares of Newco Common Stock. The
holders of the Exchange Shares and the Corporation shall take all other
necessary or appropriate actions in connection with or to effect such
closing.
6. Termination Date.
(a) The rights of the holders to convert the Class E Preferred into
shares of Common Stock pursuant to Section 4 shall terminate and be of no
further force and effect on the date that is six years after the date of
the first issuance of any shares of Class E Preferred hereunder (the
"Conversion Termination Date").
(b) The rights of the holders to exercise the Exchange Right pursuant
to Section 5 shall terminate and be of no further force and effect on the
earlier to occur of (i) the date that is six years after the date of the
first issuance of any shares of the Class E Preferred hereunder and (ii)
the date on which Newco (as defined in the Purchase Agreement) shall
complete an initial public offering of its common equity (the "Exchange
Termination Date").
7. Recapitalizations. On or prior to the Conversion Termination Date, if at
any time or from time to time there shall be a recapitalization of the Common
Stock (other than a subdivision, combination or merger or sale of assets
provided for in Section 3 or Section 4) provision shall be made so that the
holders of the Class E Preferred shall thereafter be entitled to receive upon
conversion of the Class E Preferred the number of shares of stock or other
securities or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of Section 4 with respect to the rights of the
holders of the Class E Preferred after the recapitalization to the end that the
provisions of Section 4 (including adjustment of the Conversion Price then in
effect and the number of shares purchasable upon conversion of the Class E
Preferred) shall be applicable after that event as nearly equivalent as may be
practicable.
8. No Impairment. The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance 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 hereof and in the taking of all such action as may be necessary or
appropriate in order
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to protect the Class E Conversion Rights and Exchange Right of the holders of
the Class E Preferred against impairment.
9. Fractional Shares and Certificate as to Adjustments.
(a) No fractional shares shall be issued upon the conversion of the
Class E Preferred, and the number of shares of Common Stock to be issued
shall be rounded to the nearest whole share.
(b) Upon the occurrence of each adjustment or readjustment of the
Conversion Price pursuant to Section 4, the Corporation, at its expense,
shall promptly compute such adjustment or readjustment in accordance with
the terms hereof and prepare and furnish to each holder of shares of Class
E Preferred 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 Class E Preferred, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustment and
readjustment, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share
of Class E Preferred.
10. Notices. Any notice required by the provisions hereof to be given to
the holders of shares of Class E Preferred shall be deemed given on the date of
service if served personally on the party to whom notice is to be given, or on
the date of transmittal of services by facsimile transmission to the party to
whom notice is to be given, and addressed to each holder of record at his or its
address appearing on the books of the Corporation.
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H. TERMS OF CLASS F CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions of the Class F Preferred.
Except as expressly provided in this Section H of this Article Fourth ("Section
H"), references to "Sections" in this Section H shall be references to Sections
within this Section H.
CLASS F CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class F Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class F Preferred shall be entitled to cast the number of
votes which he or it would have had the right to cast had all of its or his
Class F Preferred been converted, as provided in Section 4, into Common
Stock ("As Converted Basis") as of the record date of the meeting at which
such votes are to be cast or as of the date any written consent is taken,
including any fraction of a Share of Common Stock into which a holder's
Class F Preferred would be convertible. Holders of Class F Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class F Preferred shall be entitled to notice
of all meetings or actions of stockholders.
(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class F Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of at least seventy-five percent (75%) of the then
outstanding Class F Preferred, voting as a single class on an As Converted
Basis, and such further affirmative vote, if any, of the holders of any
class of preferred shares as may be otherwise required by the laws of the
State of Delaware or this Amended and Restated Certificate of
Incorporation:
(i) amend this Amended and Restated Certificate of Incorporation
or the By-laws of the Corporation in any manner that would or could
prejudice the rights of the holders of the Class F Preferred,
including any such amendment (or similar effect which would occur by
virtue of the merger or consolidation of the Corporation) that does
any of the following:
(A) increases or decreases the par value of the issued Class
F Preferred;
(B) changes issued Class F Preferred into a lesser number of
shares of the same class or into the same or a different number
of shares of any other class, with or without par value,
theretofore or then authorized;
(C) changes the terms, or adds terms, of the Class F
Preferred in any manner prejudicial to the holders of such
shares;
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(D) changes the terms of issued shares of any class senior,
junior or pari passu to the Class F Preferred in any manner
prejudicial to the holders of the Class F Preferred;
(E) authorizes shares of another class that are convertible
into, or authorizes the conversion of shares of another class
into, Class F Preferred or authorizes the Directors to fix or
alter conversion rights of shares of another class that are
convertible into Class F Preferred;
(F) provides, in the case of an amendment described in
Section 1(b)(i)(A) or (B), that the stated capital of the
Corporation shall be reduced or eliminated as a result of the
amendment, or provides, in the case of Section 1(b)(i)(E), that
the stated capital of the Corporation shall be reduced or
eliminated upon the exercise of such conversion rights; provided
that any such reduction or elimination is consistent with Section
244 of the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation,
or provides that thereafter an amendment to this Amended and
Restated Certificate of Incorporation may be adopted that changes
substantially the purposes of the Corporation; or
(H) changes the Corporation into a nonprofit corporation.
(ii) Authorize, issue or sell or obligate itself to authorize,
issue or sell any class of its capital stock or other securities
(including debt securities) convertible into or exercisable for any
equity security which ranks senior or pari passu in right, either as
to voting, dividends or upon liquidation or otherwise, with the Class
F Preferred.
(c) Notwithstanding anything herein to the contrary contained in
Section 1(a) or (b), so long as any Group I Preferred Stock remains
outstanding, the Corporation shall not, without the affirmative vote by the
holders of at least seventy-five percent (75%) of the then outstanding
Group I Preferred Stock on an As Converted Basis, effect (i) any sale,
lease, assignment, transfer or other conveyance of all or substantially all
of the assets or capital stock of the Corporation, (ii) any
recapitalization, reclassification, reorganization or any similar
transaction with respect to any of its shares of capital stock, (iii) any
consolidation or merger involving the Corporation or (iv) effect any
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class F Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable when and if declared
by the Board of Directors of the Corporation, out of funds legally
available therefor, prior and in preference to any declaration or payment
of any dividend on the Class A Preferred, Class B Preferred, Class D
Preferred, Class G Preferred or Common Stock or any shares of any
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class of capital stock of the Corporation (other than on the Class C
Preferred and Class E Preferred), annually in arrears on the first day of
January of each year. The dividends provided for in this Section 2(a) shall
not be cumulative.
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class F Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock;
provided, that for the purposes of determining the amount of any such
dividend payable to the holders of Class F Preferred, such holders shall be
entitled to receive a proportionate amount of such dividends as if all
issued and outstanding Class F Preferred had been converted into Common
Stock as of the record date for the determination of holders entitled to
receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and Common Stock will be entitled to receive
from the Corporation's assets available for distribution to stockholders,
the amounts and preferences as set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or distribution shall be made to the holders of Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E
Preferred, Class G Preferred, Blank Check Preferred or Common Stock or
shares of any class of capital stock of the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
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dividends on such shares; the holders of Class D Preferred shall
receive cash in the amount of One and 35/100 Dollars ($1.35) per
share, plus an amount equal to declared but unpaid dividends on such
shares; the holders of Class E Preferred shall receive cash in the
amount of the Class E Liquidation Preference Amount; provided,
however, that except as provided in the next proviso, the aggregate
amount payable to the holders of Class E Preferred pursuant to this
Section 3(a)(ii) shall not exceed Five Million Dollars ($5,000,000);
provided, further, that if the holders of Class E Preferred shall have
purchased additional shares of Common Stock pursuant to the terms of
Section 1(h) of the Purchase Agreement, the aggregate amount set forth
in the immediately preceding proviso shall be increased by the
aggregate amount actually paid for such Common Stock; the holders of
Class G Preferred shall receive cash in the amount of One and 85/100
Dollars ($1.85) per share, plus an amount equal to declared but unpaid
dividends on such shares; and the holders of Blank Check Preferred
shall receive the liquidation preference which is set forth in the
Certificate of Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i)-(iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount payable to the holders of the Common Stock
pursuant to this Section 3(a)(v) exceed One Million One Hundred
Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i)-(vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
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If, upon any such event, the Corporation has insufficient funds
to pay the amounts payable under Section 3(a)(i) to the holders of all
the outstanding Class F Preferred, the holders of Class F Preferred
shall share ratably in any distribution of assets in proportion to the
full amounts to which they would otherwise be respectively entitled.
Further, in the event that the holders of the Class F Preferred shall
have been paid all amounts payable under Section 3(a)(i) but the
Corporation has insufficient funds to pay the amounts payable under
Section 3(a)(ii) to the holders of all the outstanding Class C
Preferred, the holders of Class C Preferred shall share ratably in any
distribution of assets in proportion to the full amounts to which they
would otherwise be respectively entitled. Further, if, upon any such
event, the Corporation has insufficient funds to pay the amounts
payable under Section 3(a)(iii) to the holders of all the outstanding
Group II Preferred Stock, the holders of such Group II Preferred Stock
shall share ratably in any distribution of assets in proportion to the
full amounts to which they would otherwise be respectively entitled.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all the property and assets of the Corporation, nor the
consolidation or merger of the Corporation with or into any other
corporation or corporations, nor the consolidation or merger of any
other corporation or corporations with or into the Corporation, nor
the reorganization of the Corporation, shall be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation within the
meaning of this Section 3 if the holders of at least fifty-one percent
(51%) of the then outstanding Convertible Preferred Shares and Class F
Preferred together elect to have such events not deemed a liquidation
of the Corporation by giving written notice to the Corporation.
(c) After the payment in cash to the holders of Class F Preferred
of the full preferential amount fixed in accordance with the
provisions of Section 3(a) with respect to the outstanding Class F
Preferred, the holders of outstanding Class F Preferred as such will
have no right or claim to any of the remaining assets of the
Corporation.
(d) In the event (i) the holders of the Class F Preferred vote to
convert their shares of Class F Preferred into Common Stock
immediately prior to or in connection with an event specified in
Section 3(a) or (ii) any holder of Class F Preferred otherwise
converts their shares of Class F Preferred into Common Stock in
accordance with such holder's rights under Section 4, the priorities
and preferences set forth in Section 3(a) shall be of no further
effect and the holders of such Common Stock shall share all of the
assets of the Corporation available for distribution to all holders of
Common Stock ratably in proportion to the number of shares of Common
Stock held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class F Preferred
shall, subject to the terms and conditions hereinafter set forth,
convert such Class F Preferred into fully paid and nonassessable
shares of Common Stock at the Conversion Price (as defined in Section
4(b)) in effect on the Conversion Date (as defined in Section 4(c)),
at the following times and pursuant to the following conditions: (i)
at any time, at such
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stockholder's option; (ii) automatically and simultaneously upon the
Closing of a Public Offering (as defined in this Section 4(a)); or
(iii) upon the written notice to the Corporation at the election by the
holders of seventy-five percent (75%) of the outstanding Class F
Preferred, voting on an As Converted Basis. The Closing of a Public
Offering, for purposes of this Section H. 4 only, shall mean the
Closing of the sale by the Corporation of Common Stock pursuant to an
effective registration statement under the Securities Act of 1933, as
amended; provided, that such sale yields gross proceeds of not less
than Fifty Million Dollars ($50,000,000) at a price of not less than
Fifteen Dollars ($15.00) per share and is made pursuant to a firm
commitment underwriting.
(b) Conversion Price. Each Class F Preferred shall be convertible
at an office or agency referred to below into a number of fully paid
and nonassessable shares of Common Stock (calculated as to each
conversion to the nearest one-hundredth (1/100th) of a share) as is
determined by dividing Twelve Dollars ($12.00) by the Conversion Price
in effect on the Conversion Date. As of the date this Amended and
Restated Certificate of Incorporation was filed with the Secretary of
State of Delaware, the price at which Common Stock shall initially be
issuable upon conversion shall be Twelve Dollars ($12.00) per share,
which price may be adjusted from time to time as provided in Section
4(f) (the "Conversion Price").
(c) Method of Conversion. In order to exercise such conversion
privilege, the holder of any Class F Preferred to be converted shall
present and surrender the certificate(s) representing such Class F
Preferred during usual business hours at any office or agency of the
Corporation maintained for the transfer of Class F Preferred and shall
deliver a written notice of its election to convert the Class F
Preferred represented by such certificate(s), or any portion thereof,
specified in such notice. Such notice shall also state the name or
names (with address) in which the certificate or certificates for
Common Stock issuable on such conversion shall be issued. If so
required by the Corporation, any certificate for Class F Preferred
surrendered for conversion shall be accompanied by instruments of
transfer, in form satisfactory to the Corporation, duly executed by
the holder of such Class F Preferred or such holder's duly authorized
representative. Each conversion of Class F Preferred shall be deemed
to have been effected on the date (the "Conversion Date") on which the
certificate or certificates representing such Class F Preferred shall
have been surrendered and any required notice and instruments of
transfer received as aforesaid. Subject to the provisions of Section
4(f)(viii), the person or persons in whose name or names any
certificate or certificates for Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders
of record of such Common Stock immediately prior to the close of
business on the Conversion Date. Subject to the provisions of Section
(f)(viii), as promptly as practicable (and in any event within two (2)
business days) after the presentation and surrender for conversion, as
herein provided, of any certificate or certificates for Class F
Preferred, the Corporation shall issue and deliver at such office or
agency, to or upon the written order of the holder thereof, a
certificate or certificates for the number of shares of Common Stock
issuable upon such conversion. In case any certificate or certificates
for Class F Preferred shall be surrendered for conversion of less than
all of the Class F Preferred represented thereby, the Corporation
shall deliver at such office or agency, to or upon the written order
of the holder thereof, a certificate or certificates for the number of
Class F Preferred represented by such surrendered
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certificate or certificates which are not converted. The issuance of
certificates for Common Stock issuable upon the conversion of Class F
Preferred, and the issuance of certificates representing Class F
Preferred which are not converted as described above, shall be at the
Corporation's expense and without charge to the converting holder for
any tax imposed on the Corporation in respect of the issue thereof.
The Corporation shall not, however, be required to pay any tax which
may be payable with respect to any transfer involved in the issue and
delivery of any certificate in a name other than that of the holder of
the Class F Preferred and the Corporation shall not be required to
issue or deliver any such certificate unless and until the person
requesting the issue thereof shall have paid to the Corporation the
amount of such tax or has established to the satisfaction of the
Corporation that such tax has been paid.
(d) No Adjustment for Dividends. With respect to any conversion
of Class F Preferred into Common Stock pursuant to this Section 4, no
adjustment shall be made for dividends declared but as yet unpaid on
the Class F Preferred as of any record date prior to the Conversion
Date; provided, however, that upon the conversion of such Class F
Preferred, the dividend declared but as yet unpaid on the Class F
Preferred shall be payable on the Common Stock issued upon such
conversion as if such Common Stock were outstanding as of the record
date for the determination of holders entitled to receive said
dividend.
(e) Fractional Shares. If more than one Class F Preferred share
shall be surrendered for conversion at one time by the same holder,
the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of
Class F Preferred shares so surrendered. If any fractional interest in
a Share of Common Stock would be deliverable upon the conversion of
any Class F Preferred, the Corporation shall issue a certificate which
shall evidence and include such fractional interest in the Common
Stock.
(f) Conversion Price Adjustments. The Conversion Price for the
Class F Preferred shall be subject to adjustment from time to time as
follows:
(i) Common Stock Issued at Less Than the Conversion Price.
In the event that the Corporation shall issue Additional Common
Shares (as defined in Article 4, Section C. 4(f)(i) of this
Amended and Restated Certificate of Incorporation), the
Conversion Price in effect immediately prior to each such
issuance shall forthwith be reduced to a price determined by
multiplying the then current Conversion Price by a fraction (A)
the numerator of which shall be the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such
issuance, plus (2) the number of shares of Common Stock that the
aggregate consideration received by the Corporation for the total
number of Additional Common Shares so issued would purchase at
such Conversion Price, and (B) the denominator of which shall be
the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of Additional Common
Shares so issued.
For the purposes of any adjustment of the Conversion Price
pursuant to this Section 4(f)(i), the following provisions shall be
applicable:
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(A) Cash. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Corporation
shall be deemed to be the amount of the cash proceeds received by
the Corporation for such Common Stock before deducting therefrom
any reasonable discounts, commissions, taxes or other expenses
allowed, paid or incurred by the Corporation for any underwriting
or otherwise in connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (other than upon the conversion of
shares of capital stock or other securities of the Corporation)
for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration
other than cash shall be deemed to be the fair value thereof (as
determined in good faith by the Board of Directors of the
Corporation, whose determination shall be conclusive to the
extent reasonable), irrespective of any accounting treatment;
provided, that such fair value as determined by the Board of
Directors shall not exceed the aggregate Current Market Price (as
defined in Section 4(g)) of the Common Stock being issued as of
the date the Board of Directors authorizes the issuance of such
Common Stock.
(C) Options and Convertible Securities. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable)
other than Excluded Shares, (ii) securities by their terms
convertible into or exchangeable for Common Stock (whether or not
at the time so convertible or exchangeable), or (iii) options,
warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall be
deemed to have been issued at the time such options,
warrants or other rights become exercisable and for a
consideration equal to the consideration (determined in the
manner provided in Sections 4(f)(i)(A) and (B)), if any,
received by the Corporation upon the issuance of such
options, warrants or other rights plus the minimum purchase
price provided in such options, warrants or other rights for
the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed
to have been
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issued at the time such securities become convertible or
exchangeable or such options, warrants or other rights
become exercisable and for a consideration equal to the
consideration, if any, received by the Corporation for any
such securities and related options, warrants or other
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation
upon the conversion or exchange of such securities and the
exercise of any related options, warrants or other rights
(the consideration in each case to be determined in the
manner provided in Sections 4(f)(i)(A) and (B));
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options,
warrants or other rights which have become exercisable or
conversion of or exchange of such convertible or
exchangeable securities which have become convertible or
exchangeable, or any change in the consideration to be
received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change
resulting from any subdivision, split-up, combination or
reclassification thereof, the Conversion Price as then in
effect shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment been
made upon such options, warrants or other rights not
exercised becoming exercisable prior to such change, or
securities not converted or exchanged becoming convertible
or exchangeable prior to such change, upon the basis of such
change but only if as a result of such adjustment the
Conversion Price then in effect is thereby reduced;
(4) on the expiration or cancellation of any such
options, warrants or other rights, or the termination of the
right to convert or exchange such convertible or
exchangeable securities, if the Conversion Price shall have
been adjusted upon such becoming exercisable, convertible or
exchangeable, such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options,
warrants or other rights becoming exercisable or securities
becoming convertible or exchangeable on the basis of the
issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants
or other rights, or upon the conversion or exchange of such
securities; and
(5) if the Conversion Price shall have been adjusted
upon such options, warrants or other rights becoming
exercisable or such convertible or exchangeable securities
becoming convertible or exchangeable, no further adjustment
of the Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise, conversion or
exchange thereof.
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(ii) Excluded Shares. "Excluded Shares" has the meaning given to
it in Article 4, Section C. 4(f)(ii) of this Amended and Restated
Certificate of Incorporation.
(iii) Stock Dividends; Stock Splits, Etc. If the number of shares
of Common Stock outstanding at any time after the date of issuance of
the Class F Preferred is increased by a stock dividend payable in
Common Stock or by a subdivision or split-up of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately adjusted so that the
holder of any Class F Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class F Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date of issuance of the Class
F Preferred is decreased by a combination of the outstanding Common
Stock, then immediately after the effective date of such combination,
the Conversion Price shall be appropriately increased so that the
holder of any Class F Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class F Preferred been converted immediately prior thereto.
(v) Reorganizations, Etc. In the case of any capital
reorganization of the Corporation, any reclassification of Common
Stock, the consolidation of the Corporation with or the merger of the
Corporation with or into any other entity (other than a reorganization
or merger solely for the purpose of the change in the state of
incorporation of the Corporation) or the sale, lease or other transfer
of all or substantially all of the assets of the Corporation to any
other person or entity, each Class F Preferred shall after such
capital reorganization, reclassification, consolidation, merger, sale,
lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common
Stock issuable (at the time of such capital reorganization,
reclassification, consolidation, merger, sale, lease or other
transfer) upon conversion of such Class F Preferred would have been
entitled upon such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer; and in any such
case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the holders of the Class F
Preferred shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be possible, to any shares of capital stock
or other securities or property thereafter deliverable on the
conversion of the Class F Preferred. The subdivision or combination of
Common Stock issuable upon conversion of Class F Preferred at any time
outstanding into a greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for the
purposes of this Section 4(f)(v).
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(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons
or assets (excluding cash dividends or dividends payable solely in
Common Stock) then, in each such case, each holder of Class F
Preferred shall be entitled to receive a proportionate share of any
such distribution as if it had converted into the number of shares of
Common Stock of the Corporation into which its Class F Preferred would
have been convertible as of the record date fixed for the
determination of the holders of outstanding shares of Common Stock of
the Corporation entitled to receive such distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 4(f) shall be made to the nearest cent
or to the nearest one-hundredth (1/100th) of a share, as the case may
be. Any provision of this Section 4 to the contrary notwithstanding,
no adjustment in the Conversion Price shall be made if the amount of
such adjustment would be less than one cent ($0.01), but any such
amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of, and together with, any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Shares Upon
Certain Adjustments. In any case in which the provisions of this
Section 4(f) shall require that an adjustment shall become effective
immediately after the record date for an event, the Corporation may
defer until the occurrence of such event the issuing to the holder of
any Class F Preferred converted after such record date and before the
occurrence of such event the Additional Common Shares issuable upon
such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before
giving effect to such adjustment; provided, that the Corporation upon
request shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(ix) Applicable Adjustment. In any case in which the provisions
of this Section 4(f) shall require an adjustment to the Conversion
Price for the Class F Preferred, the applicable adjustment shall be
the largest adjustment lowering the Conversion Price resulting from
the application of any appropriate provision of this Section 4(f) to
such event.
(g) Current Market Price. "Current Market Price" shall have the
meaning given in Article 4, Section C. 4.(g) of this Amended and Restated
Certificate of Incorporation; provided, that, if within fifteen (15) days
of receiving notice of an event under Section 4(f) requiring the
calculation of the Current Market Price a holder of at least ten percent
(10%) of the currently outstanding Class F Preferred requests the
appointment of an independent appraiser, the Board of Directors shall,
within ten (10) days of such request, appoint as an independent appraiser a
nationally-known independent public accounting firm or investment bank and
the Board of Directors shall
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direct such independent appraiser to conduct an appraisal and make a report
on the Current Market Price of a Share of Common Stock within thirty (30)
days of its appointment. The determination of the Current Market Price by
such independent appraiser shall be final and binding upon the Corporation
and the holders of Class F Preferred. The costs of such independent
appraiser shall be paid by the Corporation. Any independent appraiser so
utilized shall agree to treat all information supplied by the Corporation
in a confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price
in accordance with this Section 4 and shall prepare a certificate
signed by the Treasurer of the Corporation setting forth the adjusted
Conversion Price and the facts requiring such adjustment, and such
certificate shall forthwith be filed at the office of the transfer
agent or agents, if any, for the Class F Preferred and at the
principal office of the Corporation; and
(ii) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price and the facts
requiring such adjustment shall, as soon as practicable, be mailed to
the holders of record of the outstanding Class F Preferred. Where
appropriate, such notice may be given in advance and may be included
as part of a notice required to be mailed under the provisions of
Section 4(j).
(i) Cancellation. All Class F Preferred which shall have been
surrendered for conversion as herein provided in this Section 4 shall no
longer be deemed to be outstanding and all rights with respect to such
Class F Preferred, including the rights, if any, to receive notices and to
vote, shall forthwith cease and terminate, except only the right of the
holders thereof to receive Common Stock or other assets or property in
exchange therefor.
(j) Notice to Holders. In the event that:
(i) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
(ii) the Corporation shall take action to offer for subscription
pro rata to the holders of any class of its capital stock securities
of any kind;
(iii) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the
Corporation (other than a subdivision, split-up or combination of its
Common Stock), or consolidation or merger to which the Corporation is
a party and for which approval of any stockholders of the Corporation
is required, or the sale or transfer of all or substantially all of
the assets of the Corporation; or
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(iv) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of
the Corporation; then the Corporation shall (x) in case of any such
distribution, dividend or offering of subscription rights, at least
ten (10) days prior to the date or expected date on which the books of
the Corporation shall close or a record shall be taken for the
determination of holders entitled to such distribution or subscription
rights, and (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, at least ten (10) days prior to the date or
expected date when the same shall take place, cause written notice
thereof to be mailed to each holder of Class F Preferred at such
holder's address as shown on the books of the Corporation. The notice
to be given in accordance with this Section 4 (j) shall also specify
(x) the date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled thereto, and (y) the
date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled to exchange their shares
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, as the case may be.
(k) Reservation of Shares. The Corporation shall at all times reserve
and keep available, free from preemptive rights, out of its treasury shares
or its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Class F Preferred, the full number of shares of
Common Stock then deliverable upon the conversion of all Class F Preferred
then outstanding.
(l) Reclassification of Common Stock. For the purposes of this Section
4, the term "Common Stock" shall mean (a) the class of stock designated as
the Common Stock of the Corporation on the date this Amended and Restated
Certificate of Incorporation is filed with the Secretary of State of
Delaware, or (b) any other class of stock resulting from successive changes
or reclassifications of such Common Stock consisting solely of changes in
par value or from no par value to par value, or from par value to no par
value. If at any time as a result of an adjustment made pursuant to the
provisions of Section 4)(f)(v), the holder of any Class F Preferred
thereafter surrendered for conversion shall become entitled to receive any
shares of the Corporation other than Common Stock, and the number of such
other shares so receivable upon conversion of any Class F Preferred shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 4(f)(v), and the other provisions of this
Section 4 with respect to the Common Stock shall apply on like terms to any
such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale or
other disposition of any Common Stock of the Corporation theretofore held
in its treasury shall be deemed to be an issuance thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose of
conversion of Class F Preferred requires registration with or approval of
any governmental authority under any Federal or state law or of the NASDAQ
System before
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such shares may be validly issued or delivered upon conversion, the
Corporation will in good faith and as expeditiously as possible secure such
registration or approval, as the case may be. If, and so long as, any
Common Stock into which the Class F Preferred are then convertible are
listed on any national securities exchange, the Corporation will, if
permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all of such Common Stock
issuable upon conversion.
(o) Valid Issuance. All Common Stock that may be issued upon
conversion of the Class F Preferred will upon issuance by the Corporation
be duly and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof, and the
Corporation shall take no action which will cause a contrary result
(including, without limitation, any action which would cause the Conversion
Price to be less than the par value, if any, of the Common Stock).
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I. TERMS OF CLASS G CONVERTIBLE PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions of the Class G Preferred.
Except as expressly provided in this Section I of this Article Fourth ("Section
I"), references to "Sections" in this Section I shall be references to Sections
within this Section I.
CLASS G CONVERTIBLE PREFERRED STOCK
1. Voting Rights.
(a) Holders of Class G Preferred shall be entitled to vote on any and
all matters submitted to a vote of the stockholders. For such purposes,
each holder of Class G Preferred shall be entitled to cast the number of
votes which he or it would have had the right to cast had all of its or his
Class G Preferred been converted, as provided in Section 4, into Common
Stock ("As Converted Basis") as of the record date of the meeting at which
such votes are to be cast or as of the date any written consent is taken,
including any fraction of a Share of Common Stock into which a holder's
Class G Preferred would be convertible. Holders of Class G Preferred shall
not have any right to vote their shares as a separate class, except as may
be otherwise required by the laws of the State of Delaware or as provided
herein. Each record holder of Class G Preferred shall be entitled to notice
of all meetings or actions of stockholders.
(b) Notwithstanding anything herein to the contrary contained in
Section 1(a), so long as any Class G Preferred remains outstanding, the
Corporation shall not, without the affirmative vote by (or written consent
of) the holders of seventy-five percent (75%) of the then outstanding
Convertible Preferred Shares, voting as a single class on an As Converted
Basis and such further affirmative vote, if any, of the holders of any
class of preferred shares as may be otherwise required by the laws of the
State of Delaware or this Amended and Restated Certificate of
Incorporation:
(i) amend this Amended and Restated Certificate of Incorporation
or the By-laws of the Corporation in any manner that would or could
prejudice the rights of the holders of the Convertible Preferred
Shares, including any such amendment (or similar effect which would
occur by virtue of the merger or consolidation of the Corporation)
that does any of the following:
(A) increases or decreases the par value of the issued
Convertible Preferred Shares;
(B) changes issued Convertible Preferred Shares into a
lesser number of shares of the same class or into the same or a
different number of shares of any other class, with or without
par value, theretofore or then authorized;
(C) changes the terms, or adds terms, of the Convertible
Preferred Shares in any manner prejudicial to the holders of such
shares;
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(D) changes the terms of issued shares of any class senior,
junior or pari passu to the Convertible Preferred Shares in any
manner prejudicial to the holders of Convertible Preferred
Shares;
(E) authorizes shares of another class that are convertible
into, or authorizes the conversion of shares of another class
into, Convertible Preferred Shares or authorizes the Board of
Directors to fix or alter conversion rights of shares of another
class that are convertible into Convertible Preferred Shares;
(F) provides, in the case of an amendment described in
Section 1(b)(i)(A) or (B), that the stated capital of the
Corporation shall be reduced or eliminated as a result of the
amendment, or provides, in the case of Section 1(b)(i)(E), that
the stated capital of the Corporation shall be reduced or
eliminated upon the exercise of such conversion rights; provided
that any such reduction or elimination is consistent with Section
244 of the Delaware General Corporation Law;
(G) changes substantially the purposes of the Corporation,
or provides that thereafter an amendment to this Certificate of
Incorporation may be adopted that changes substantially the
purposes of the Corporation; or
(H) changes the Corporation into a nonprofit corporation.
(ii) authorize, issue or sell or obligate itself to authorize,
issue or sell any class of its capital stock or other securities
(including debt securities) convertible into or exercisable for any
equity security which ranks senior or pari passu in right, either as
to voting, dividends or upon liquidation, with the Convertible
Preferred Shares.
(c) Notwithstanding anything herein to the contrary contained in
Section 1(a) or (b), so long as any Group I Preferred Stock remains
outstanding, the Corporation shall not, without the affirmative vote by the
holders of at least seventy-five percent (75%) of the then outstanding
Group I Preferred Stock on an As Converted Basis, effect (i) any sale,
lease, assignment, transfer or other conveyance of all or substantially all
of the assets or capital stock of the Corporation, (ii) any
recapitalization, reclassification, reorganization or any similar
transaction with respect to any of its shares of capital stock, (iii) any
consolidation or merger involving the Corporation; or (iv) effect any
transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of.
2. Dividend Rights.
(a) The holders of outstanding Class G Preferred shall be entitled to
receive dividends at the rate of 8% per annum, payable when and if declared
by the Board of Directors of the Corporation out of funds legally available
therefor annually, prior and in preference to any declaration or payment of
any dividend on the Common Stock, in
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arrears on the first day of January of each year. The dividends provided
for in this Section 2(a) shall not be cumulative.
(b) In addition to the dividends provided for in Section 2(a), the
holders of outstanding Class G Preferred shall be entitled to receive,
when, as and if declared by the Board of Directors from funds legally
available therefor, a portion of any dividends declared on Common Stock;
provided, that for the purposes of determining the amount of any such
dividend payable to the holders of Class G Preferred, such holders shall be
entitled to receive a proportionate amount of such dividends as if all
issued and outstanding Class G Preferred had been converted into Common
Stock as of the record date for the determination of holders entitled to
receive said dividend.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding up of the affairs of
the Corporation, whether voluntary or involuntary, or the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets of the
Corporation, or the reorganization, consolidation or merger of the
Corporation with or into any other company or companies, or a transaction
or series of related transactions in which more than fifty percent (50%) of
the voting power of the Corporation is disposed of or sold (whether by the
Corporation or the holders of outstanding capital stock), the holders of
outstanding Preferred Stock and Common Stock will be entitled to receive
from the Corporation's assets available for distribution to stockholders,
the amounts and preferences as set forth below:
(i) The holders of Class F Preferred shall receive cash in the
amount of Twelve Dollars ($12.00) per share, plus an amount equal to
all declared but unpaid dividends on such shares, before any payment
or distribution shall be made to the holders of Class A Preferred,
Class B Preferred, Class C Preferred, Class D Preferred, Class E
Preferred, Class G Preferred, Blank Check Preferred or Common Stock or
shares of any class of capital stock of the Corporation;
(ii) After payment to the holder of Class F Preferred of their
liquidation preference as set forth in Section 3(a)(i), the holders of
Class C Preferred shall receive cash in the amount of Three and 67/100
Dollars ($3.67) per share, plus an amount equal to all accrued but
unpaid dividends on such shares, before any payment or distribution
shall be made to the holders of Class A Preferred, Class B Preferred,
Class D Preferred, Class E Preferred, Class G Preferred, Blank Check
Preferred or Common Stock or shares of any class of capital stock of
the Corporation;
(iii) After payment to the holders of Class C Preferred and Class
F Preferred of their liquidation preference as set forth in Section
3(a)(i)-(ii), the holders of Class A Preferred shall receive cash in
the amount of 63/100 Dollars ($0.63) per share, plus an amount equal
to declared but unpaid dividends on such shares; the holders of Class
B Preferred shall receive cash in the amount of One and 25/100 Dollars
($1.25) per share, plus an amount equal to declared but unpaid
dividends on such shares; the holders of Class D Preferred shall
receive cash in
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the amount of One and 35/100 Dollars ($1.35) per share, plus an amount
equal to declared but unpaid dividends on such shares; the holders of
Class E Preferred shall receive cash in the amount of the Class E
Liquidation Preference Amount; provided, however, that except as
provided in the next proviso, the aggregate amount payable to the
holders of Class E Preferred pursuant to this Section 3(a)(ii) shall
not exceed Five Million Dollars ($5,000,000); provided, further, that
if the holders of Class E Preferred shall have purchased additional
shares of Common Stock pursuant to the terms of Section 1(h) of the
Purchase Agreement, the aggregate amount set forth in the immediately
preceding proviso shall be increased by the aggregate amount actually
paid for such Common Stock; the holders of Class G Preferred shall
receive cash in the amount of One and 85/100 Dollars ($1.85) per
share, plus an amount equal to declared but unpaid dividends on such
shares; and the holders of Blank Check Preferred shall receive the
liquidation preference which is set forth in the Certificate of
Designation setting the terms of such shares;
(iv) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Section 3(a)(i)-(iii), the
holders of Class E Preferred shall be entitled to receive payment of
an amount equal to the difference of (x) the Class E Liquidation
Preference Amount, less (y) the aggregate payments received by the
holders of Class E Preferred pursuant to Section 3(a)(iii);
(v) After payment to the holders of Preferred Stock of their
liquidation preference as set forth in Sections 3(a)(i) - (iv), the
holders of outstanding shares of Common Stock as of the date of this
Amended and Restated Certificate of Incorporation was filed with the
Secretary of State of the State of Delaware (not including Common
Stock issued upon conversion of Preferred Stock) shall receive cash in
the amount of the original amounts for which such Common Stock was
issued, which will be distributed ratably in proportion to the number
of shares of Common Stock held by such holder, but in no event shall
the aggregate amount payable to the holders of the Common Stock
pursuant to this Section 3(a)(v) exceed One Million One Hundred
Thousand Dollars ($1,100,000);
(vi) After payment to the holders of Preferred Stock and Common
Stock (not including Common Stock issued upon conversion of Preferred
Stock) of their liquidation preference as set forth in Sections
3(a)(i)-(v), the Founders and holders of vested options to purchase
Common Stock shall receive cash in an amount equal to their pro-rata
portion (using the number of shares the vested option holder would
have if the options had been exercised at the then current exercise
price) of Two Million Dollars ($2,000,000);
(vii) After the payments set forth in Sections 3(a)(i) - (vi),
all remaining assets of the Corporation shall be distributed ratably
to the holders of outstanding shares of Common Stock in proportion to
the number of shares of Common Stock held by such holders.
If, upon any such event, the Corporation has insufficient funds to pay
the amounts payable under Section 3(a)(i) to the holders of all the
outstanding Class F Preferred, the
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holders of Class F Preferred shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. Further, in the event that the holders of the Class
F Preferred shall have been paid all amounts payable under Section 3(a)(i)
but the Corporation has insufficient funds to pay the amounts payable under
Section 3(a)(ii) to the holders of all the outstanding Class C Preferred,
the holders of Class C Preferred shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled. Further, if, upon any such event, the Corporation
has insufficient funds to pay the amounts payable under Section 3(a)(iii)
to the holders of all the outstanding Group II Preferred Stock, the holders
of such Group II Preferred Stock shall share ratably in any distribution of
assets in proportion to the full amounts to which they would otherwise be
respectively entitled.
(b) None of the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially
all the property and assets of the Corporation, nor the consolidation or
merger of the Corporation with or into any other corporation or
corporations, nor the consolidation or merger of any other corporation or
corporations with or into the Corporation, nor the reorganization of the
Corporation, shall be deemed a liquidation, dissolution or winding up of
the affairs of the Corporation within the meaning of this Section 3 if the
holders of at least fifty-one percent (51%) of the then outstanding
Convertible Preferred Shares and Class F Preferred together elect to have
such events not deemed a liquidation of the Corporation by giving written
notice to the Corporation.
(c) After the payment in cash to the holders of Class G Preferred of
the full preferential amount fixed in accordance with the provisions of
Section 3(a) with respect to the outstanding Class G Preferred, the holders
of outstanding Class G Preferred as such will have no right or claim to any
of the remaining assets of the Corporation.
(d) In the event (i) the holders of the Class G Preferred vote to
convert their shares of Class G Preferred into Common Stock immediately
prior to or in connection with an event specified in Section 3(a) or (ii)
any holder of Class G Preferred otherwise converts their shares of Class G
Preferred into Common Stock in accordance with such holder's rights under
Section 4, the priorities and preferences set forth in Section 3(a) shall
be of no further effect and the holders of such Common Stock shall share
all of the assets of the Corporation available for distribution to all
holders of Common Stock ratably in proportion to the number of shares of
Common Stock held by them respectively.
4. Conversion Rights.
(a) Conversion. The holder of each outstanding Class G Preferred
shall, subject to the terms and conditions hereinafter set forth, convert
such Class G Preferred into fully paid and nonassessable shares of Common
Stock at the Conversion Price (as defined in Section 4(b)) in effect on the
Conversion Date (as defined in Section 4(c)), at the following times and
pursuant to the following conditions: (i) at any time, at such
stockholder's option; (ii) automatically and simultaneously upon the
Closing of a Public Offering; or (iii) upon the written notice to the
Corporation at the election by the holders
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of seventy-five percent (75%) of the outstanding Class G Preferred, voting
on an As Converted Basis.
(b) Conversion Price. Each Class G Preferred shall be convertible at
an office or agency referred to below into a number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to
the nearest one-hundredth (1/100th) of a share) as is determined by
dividing One and 85/100 Dollars ($1.85) by the Conversion Price in effect
on the Conversion Date. As of the date this Amended and Restated
Certificate of Incorporation was filed with the Secretary of State of
Delaware, the price at which Common Stock shall initially be issuable upon
conversion shall be One and 85/100 Dollars ($1.85) per share, which price
may be adjusted from time to time as provided in Section 4(f) (the
"Conversion Price").
(c) Method of Conversion. In order to exercise such conversion
privilege, the holder of any Class G Preferred to be converted shall
present and surrender the certificate(s) representing such Class G
Preferred during usual business hours at any office or agency of the
Corporation maintained for the transfer of Class G Preferred and shall
deliver a written notice of its election to convert the Class G Preferred
represented by such certificate(s), or any portion thereof, specified in
such notice. Such notice shall also state the name or names (with address)
in which the certificate or certificates for Common Stock issuable on such
conversion shall be issued. If so required by the Corporation, any
certificate for Class G Preferred surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder of such Class G Preferred or such
holder's duly authorized representative. Each conversion of Class G
Preferred shall be deemed to have been effected on the date (the
"Conversion Date") on which the certificate or certificates representing
such Class G Preferred shall have been surrendered and any required notice
and instruments of transfer received as aforesaid. Subject to the
provisions of Section 4(f)(viii), the person or persons in whose name or
names any certificate or certificates for Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders
of record of such Common Stock immediately prior to the close of business
on the Conversion Date. Subject to the provisions of Section (f)(viii), as
promptly as practicable (and in any event within two (2) business days)
after the presentation and surrender for conversion, as herein provided, of
any certificate or certificates for Class G Preferred, the Corporation
shall issue and deliver at such office or agency, to or upon the written
order of the holder thereof, a certificate or certificates for the number
of shares of Common Stock issuable upon such conversion. In case any
certificate or certificates for Class G Preferred shall be surrendered for
conversion of less than all of the Class G Preferred represented thereby,
the Corporation shall deliver at such office or agency, to or upon the
written order of the holder thereof, a certificate or certificates for the
number of Class G Preferred represented by such surrendered certificate or
certificates which are not converted. The issuance of certificates for
Common Stock issuable upon the conversion of Class G Preferred, and the
issuance of certificates representing Class G Preferred which are not
converted as described above, shall be at the Corporation's expense and
without charge to the converting holder for any tax imposed on the
Corporation in respect of the issue thereof. The Corporation shall not,
however, be required to pay any tax which may be payable with respect to
any transfer involved in the issue and delivery of any certificate in a
name other than that of the holder
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of the Class G Preferred and the Corporation shall not be required to issue
or deliver any such certificate unless and until the person requesting the
issue thereof shall have paid to the Corporation the amount of such tax or
has established to the satisfaction of the Corporation that such tax has
been paid.
(d) No Adjustment for Dividends. With respect to any conversion of
Class G Preferred into Common Stock pursuant to this Section 4, no
adjustment shall be made for dividends declared but as yet unpaid on the
Class G Preferred as of any record date prior to the Conversion Date;
provided, however, that upon the conversion of such Class G Preferred, the
dividend declared but as yet unpaid on the Class G Preferred shall be
payable on the Common Stock issued upon such conversion as if such Common
Stock were outstanding as of the record date for the determination of
holders entitled to receive said dividend.
(e) Fractional Shares. If more than one Class G Preferred share shall
be surrendered for conversion at one time by the same holder, the number of
full Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Class G Preferred shares so surrendered.
If any fractional interest in a Share of Common Stock would be deliverable
upon the conversion of any Class G Preferred, the Corporation shall issue a
certificate which shall evidence and include such fractional interest in
the Common Stock.
(f) Conversion Price Adjustments. The Conversion Price for the Class G
Preferred shall be subject to adjustment from time to time as follows:
(i) Common Stock Issued at Less Than the Conversion Price. In the
event that the Corporation shall issue Additional Common Shares (as
defined in Article 4, Section C. 4(f)(i) of this Amended and Restated
Certificate of Incorporation), the Conversion Price in effect
immediately prior to each such issuance shall be reduced to a price
determined by multiplying the then current Conversion Price by a
fraction (A) the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such
issuance, plus (2) the number of shares of Common Stock that the
aggregate consideration received by the Company for the total number
of Additional Common Shares so issued would purchase at such
Conversion Price, and (B) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to such
issuance plus the number of Additional Common Stock so issued.
For the purposes of any adjustment of the Conversion Price pursuant to
this Section 4(f)(i), the following provisions shall be applicable:
(A) Cash. In the case of the issuance of Common Stock for
cash, the amount of the consideration received by the Corporation
shall be deemed to be the amount of the cash proceeds received by
the Corporation for such Common Stock before deducting therefrom
any reasonable discounts, commissions, taxes or other expenses
allowed, paid or incurred
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by the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
(B) Consideration Other Than Cash. In the case of the
issuance of Common Stock (other than upon the conversion of
shares of capital stock or other securities of the Corporation)
for a consideration in whole or in part other than cash,
including securities acquired in exchange therefor (other than
securities by their terms so exchangeable), the consideration
other than cash shall be deemed to be the fair value thereof (as
determined in good faith by the Board of Directors of the
Corporation, whose determination shall be conclusive to the
extent reasonable), irrespective of any accounting treatment;
provided, that such fair value as determined by the Board of
Directors shall not exceed the aggregate Current Market Price (as
defined in Section 4(g)) of the Common Stock being issued as of
the date the Board of Directors authorizes the issuance of such
Common Stock.
(C) Options and Convertible Securities. In the case of the
issuance of (i) options, warrants or other rights to purchase or
acquire Common Stock (whether or not at the time exercisable)
other than Excluded Shares, (ii) securities by their terms
convertible into or exchangeable for Common Stock (whether or not
at the time so convertible or exchangeable), or (iii) options,
warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):
(1) the aggregate maximum number of shares of Common
Stock deliverable upon exercise of such options, warrants or
other rights to purchase or acquire Common Stock shall be
deemed to have been issued at the time such options,
warrants or other rights become exercisable and for a
consideration equal to the consideration (determined in the
manner provided in Sections 4(f)(i)(A) and (B)), if any,
received by the Corporation upon the issuance of such
options, warrants or other rights plus the minimum purchase
price provided in such options, warrants or other rights for
the Common Stock covered thereby;
(2) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or
acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed
to have been issued at the time such securities become
convertible or exchangeable or such options, warrants or
other rights become exercisable and for a consideration
equal to the consideration, if any, received by the
Corporation for any such securities and related options,
warrants or other rights (excluding any cash received on
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account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such
securities and the exercise of any related options, warrants
or other rights (the consideration in each case to be
determined in the manner provided in Sections 4(f)(i)(A) and
(B));
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options,
warrants or other rights which have become exercisable or
conversion of or exchange of such convertible or
exchangeable securities which have become convertible or
exchangeable, or any change in the consideration to be
received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change
resulting from any subdivision, split-up, combination or
reclassification thereof, the Conversion Price as then in
effect shall forthwith be readjusted to such Conversion
Price as would have been obtained had an adjustment been
made upon such options, warrants or other rights not
exercised becoming exercisable prior to such change, or
securities not converted or exchanged becoming convertible
or exchangeable prior to such change, upon the basis of such
change but only if as a result of such adjustment the
Conversion Price then in effect is thereby reduced;
(4) on the expiration or cancellation of any such
options, warrants or other rights, or the termination of the
right to convert or exchange such convertible or
exchangeable securities, if the Conversion Price shall have
been adjusted upon such becoming exercisable, convertible or
exchangeable, such Conversion Price shall forthwith be
readjusted to such Conversion Price as would have been
obtained had an adjustment been made upon such options,
warrants or other rights becoming exercisable or securities
becoming convertible or exchangeable on the basis of the
issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants
or other rights, or upon the conversion or exchange of such
securities; and
(5) if the Conversion Price shall have been adjusted
upon such options, warrants or other rights becoming
exercisable or such convertible or exchangeable securities
becoming convertible or exchangeable, no further adjustment
of the Conversion Price shall be made for the actual
issuance of Common Stock upon the exercise, conversion or
exchange thereof.
(ii) Excluded Shares. "Excluded Shares" has the meaning given to
it in Article 4, Section C. 4(f)(ii) of this Amended and Restated
Certificate of Incorporation.
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(iii) Stock Dividends; Stock Splits, Etc. If the number of shares
of Common Stock outstanding at any time after the date of issuance of
the Class G Preferred is increased by a stock dividend payable in
Common Stock or by a subdivision or split-up of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately adjusted so that the
holder of any Class G Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class G Preferred been converted immediately prior thereto.
(iv) Combination of Shares. If the number of shares of Common
Stock outstanding at any time after the date of issuance of the Class
F Preferred is decreased by a combination of the outstanding Common
Stock, then immediately after the effective date of such combination,
the Conversion Price shall be appropriately increased so that the
holder of any Class G Preferred thereafter converted shall be entitled
to receive the number of shares of Common Stock of the Corporation
which such holder would have owned immediately following such action
had such Class G Preferred been converted immediately prior thereto.
(v) Reorganizations, Etc. In the case of any capital
reorganization of the Corporation, any reclassification of Common
Stock, the consolidation of the Corporation with or the merger of the
Corporation with or into any other entity (other than a reorganization
or merger solely for the purpose of the change in the state of
incorporation of the Corporation) or the sale, lease or other transfer
of all or substantially all of the assets of the Corporation to any
other person or entity, each Class G Preferred shall after such
capital reorganization, reclassification, consolidation, merger, sale,
lease or other transfer be convertible into the number of shares of
capital stock or other securities or property to which the Common
Stock issuable (at the time of such capital reorganization,
reclassification, consolidation, merger, sale, lease or other
transfer) upon conversion of such Class G Preferred would have been
entitled upon such capital reorganization, reclassification,
consolidation, merger, sale, lease or other transfer; and in any such
case, if necessary, the provisions set forth herein with respect to
the rights and interests thereafter of the holders of the Class G
Preferred shall be appropriately adjusted so as to be applicable, as
nearly as may reasonably be possible, to any shares of capital stock
or other securities or property thereafter deliverable on the
conversion of the Class G Preferred. The subdivision or combination of
Common Stock issuable upon conversion of Class G Preferred at any time
outstanding into a greater or lesser number of shares of Common Stock
(whether with or without par value) shall not be deemed to be a
reclassification of the Common Stock of the Corporation for the
purposes of this Section 4(f)(v).
(vi) Evidences of Indebtedness or Assets. In case the Corporation
shall declare a distribution payable in securities of other Persons,
evidences of indebtedness issued by the Corporation or other Persons
or assets (excluding cash dividends or dividends payable solely in
Common Stock) then, in each such case,
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each holder of Class G Preferred shall be entitled to receive a
proportionate share of any such distribution as if it had converted
into the number of shares of Common Stock of the Corporation into
which its Class G Preferred would have been convertible as of the
record date fixed for the determination of the holders of outstanding
shares of Common Stock of the Corporation entitled to receive such
distribution.
(vii) Rounding of Calculations; Minimum Adjustment. All
calculations under this Section 4(f) shall be made to the nearest cent
or to the nearest one-hundredth (1/100th) of a share, as the case may
be. Any provision of this Section 4 to the contrary notwithstanding,
no adjustment in the Conversion Price shall be made if the amount of
such adjustment would be less than one cent ($0.01), but any such
amount shall be carried forward and an adjustment with respect thereto
shall be made at the time of, and together with, any subsequent
adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate one cent ($0.01) or more.
(viii) Timing of Issuance of Additional Common Stock Upon Certain
Adjustments. In any case in which the provisions of this Section 4(f)
shall require that an adjustment shall become effective immediately
after the record date for an event, the Corporation may defer until
the occurrence of such event the issuing to the holder of any Class G
Preferred converted after such record date and before the occurrence
of such event the additional Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and
above the Common Stock issuable upon such conversion before giving
effect to such adjustment; provided, that the Corporation upon request
shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(ix) Applicable Adjustment. In any case in which the provisions
of this Section 4(f) shall require an adjustment to the Conversion
Price for the Class G Preferred, the applicable adjustment shall be
the largest adjustment lowering the Conversion Price resulting from
the application of any appropriate provision of this Section 4(f) to
such event.
(g) Current Market Price. "Current Market Price" shall have the
meaning given in Article 4, Section C. 4.(g) of this Amended and Restated
Certificate of Incorporation; provided, that, if within fifteen (15) days
of receiving notice of an event under Section 4(f) requiring the
calculation of the Current Market Price a holder of at least ten percent
(10%) of the currently outstanding Class G Preferred requests the
appointment of an independent appraiser, the Board of Directors shall,
within ten (10) days of such request, appoint as an independent appraiser a
nationally-known independent public accounting firm or investment bank and
the Board of Directors shall direct such independent appraiser to conduct
an appraisal and make a report on the Current Market Price of a Share of
Common Stock within thirty (30) days of its appointment. The determination
of the Current Market Price by such independent appraiser shall be final
and binding upon the Corporation and the holders of Class G
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Preferred. The costs of such independent appraiser shall be paid by the
Corporation. Any independent appraiser so utilized shall agree to treat all
information supplied by the Corporation in a confidential manner.
(h) Statement Regarding Adjustments. Whenever the Conversion Price is
adjusted as herein provided:
(i) the Corporation shall compute the adjusted Conversion Price
in accordance with this Section 4 and shall prepare a certificate
signed by the Treasurer of the Corporation setting forth the adjusted
Conversion Price and the facts requiring such adjustment, and such
certificate shall forthwith be filed at the office of the transfer
agent or agents, if any, for the Class G Preferred and at the
principal office of the Corporation; and
(ii) a notice stating that the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price and the facts
requiring such adjustment shall, as soon as practicable, be mailed to
the holders of record of the outstanding Class G Preferred. Where
appropriate, such notice may be given in advance and may be included
as part of a notice required to be mailed under the provisions of
Section 4(j).
(i) Cancellation. All Class G Preferred which shall have been
surrendered for conversion as herein provided in this Section 4 shall no
longer be deemed to be outstanding and all rights with respect to such
Class G Preferred, including the rights, if any, to receive notices and to
vote, shall forthwith cease and terminate, except only the right of the
holders thereof to receive Common Stock or other assets or property in
exchange therefor.
(j) Notice to Holders. In the event that:
(i) the Corporation shall take action to make any distribution or
dividend to the holders of any class of its capital stock;
(ii) the Corporation shall take action to offer for subscription
pro rata to the holders of any class of its capital stock securities
of any kind;
(iii) the Corporation shall take action to accomplish any capital
reorganization, or reclassification of the capital stock of the
Corporation (other than a subdivision, split-up or combination of its
Common Stock), or consolidation or merger to which the Corporation is
a party and for which approval of any stockholders of the Corporation
is required, or the sale or transfer of all or substantially all of
the assets of the Corporation; or
(iv) the Corporation shall take action looking to a voluntary or
involuntary dissolution, liquidation or winding up of the affairs of
the Corporation;
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then the Corporation shall (x) in case of any such distribution,
dividend or offering of subscription rights, at least ten (10) days
prior to the date or expected date on which the books of the
Corporation shall close or a record shall be taken for the
determination of holders entitled to such distribution or subscription
rights, and (y) in the case of any such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, at least ten (10) days prior to the date or
expected date when the same shall take place, cause written notice
thereof to be mailed to each holder of Class G Preferred at such
holder's address as shown on the books of the Corporation. The notice
to be given in accordance with this Section 4 (j) shall also specify
(x) the date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled thereto, and (y) the
date or expected date on which the holders of any class of the
Corporation's capital stock shall be entitled to exchange their shares
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, as the case may be.
(k) Reservation of Shares. The Corporation shall at all times
reserve and keep available, free from preemptive rights, out of its
treasury shares or its authorized but unissued Common Stock, for the
purpose of effecting the conversion of the Class F Preferred, the full
number of shares of Common Stock then deliverable upon the conversion
of all Class G Preferred then outstanding.
(l) Reclassification of Common Stock. For the purposes of this
Section 4, the term "Common Stock" shall mean (a) the class of stock
designated as the Common Stock of the Corporation on the date this
Amended and Restated Certificate of Incorporation is filed with the
Secretary of State of Delaware, or (b) any other class of stock
resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value or from no par value
to par value, or from par value to no par value. If at any time as a
result of an adjustment made pursuant to the provisions of Section
4)(f)(v), the holder of any Class G Preferred thereafter surrendered
for conversion shall become entitled to receive any shares of the
Corporation other than Common Stock, and the number of such other
shares so receivable upon conversion of any Class G Preferred shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 4(f)(v), and the other provisions of
this Section 4 with respect to the Common Stock shall apply on like
terms to any such other shares.
(m) Treasury Shares. For the purpose of this Section 4, the sale
or other disposition of any Common Stock of the Corporation
theretofore held in its treasury shall be deemed to be an issuance
thereof.
(n) Approvals. If any Common Stock to be reserved for the purpose
of conversion of Class G Preferred requires registration with or
approval of any governmental authority under any Federal or state law
or of the NASDAQ System before such shares may be validly issued or
delivered upon conversion, the Corporation will in good faith and as
expeditiously as possible secure such registration or approval, as the
case may be. If, and so long as, any Common Stock into which the Class
G Preferred are then convertible are listed on any national securities
exchange, the Corporation will, if
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permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all of such Common Stock
issuable upon conversion.
(o) Valid Issuance. All Common Stock that may be issued upon
conversion of the Class G Preferred will upon issuance by the
Corporation be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the
issuance thereof, and the Corporation shall take no action which will
cause a contrary result (including, without limitation, any action
which would cause the Conversion Price to be less than the par value,
if any, of the Common Stock).
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J. TERMS OF BLANK CHECK PREFERRED STOCK
The following is a statement of the express terms, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the shares of
Blank Check Preferred of the Corporation.
BLANK CHECK PREFERRED STOCK
Subject to the provisions of this Article Fourth and the express
provisions of each series of Blank Check Preferred and the outstanding
Preferred Stock, the Board of Directors is hereby empowered to cause the
Blank Check Preferred to be issued from time to time for such consideration
as it may from time to time fix, and to cause such Blank Check Preferred to
be issued in one or more series, with such voting powers, full or limited,
or no voting powers, and such designations, preferences and relative,
participating, optional and other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in
the resolution or resolutions providing for the issues of such stock
adopted by the Board of Directors. Each series of Blank Check Preferred
shall be distinctly designated. Except in respect of the particulars fixed
by the Board of Directors for each series as permitted hereby, all shares
of Blank Check Preferred shall be of equal rank and shall be identical. All
shares of any one series of Blank Check Preferred so designated by the
Board of Directors shall be alike in every particular, except that shares
of any one series issued at different times may differ as to the dates from
which dividends thereon shall be cumulative. The voting rights, if any, of
each such series and the preferences and relative, participating, optional
and other special rights of each such series and the qualifications,
limitations and restrictions thereof, if any, may differ from those of any
and all other series at any time outstanding; and the Board of Directors is
hereby expressly granted authority to fix, by resolutions duly adopted
prior to the issuance of any shares of a particular series of Blank Check
Preferred so designated by the Board of Directors, the voting powers of
stock of such series, if any, and the designations, preferences and
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof, if any, for such
series, including, without limitation, the following:
(a) The distinctive designation of and the number of shares of
Blank Check Preferred which shall constitute such series; provided,
that such number may be increased (but not above the total number of
authorized shares of Blank Check Preferred) or decreased (but not
below the number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(b) The rate and time at which, and the terms and conditions upon
which, dividends, if any, on Blank Check Preferred of such series
shall be paid, the extent of the preference or relation, if any, of
such dividends to the dividends payable on any other series of Blank
Check Preferred or any other class of stock of the Corporation and
whether such dividends shall be cumulative or non-cumulative;
(c) The right, if any, of the holders of Blank Check Preferred of
such series to convert the same into, or exchange the same for, shares
of any other class
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of stock or any series of any class of stock of the Corporation and
the terms and conditions of such conversion or exchange;
(d) Whether or not Blank Check Preferred of such series shall be
subject to redemption, and the redemption price or prices and the time
or times at which, and the terms and conditions upon which, Blank
Check Preferred of such series may be redeemed;
(e) The rights, if any, of the holders of Blank Check Preferred
of such series upon the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary;
(f) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Blank Check Preferred of such
series; and
(g) The voting powers, if any, of the holders of such series of
Blank Check Preferred which may, without limiting the generality of
the foregoing, include the right, voting as a series by itself or
together with any other series of the Blank Check Preferred as a
class, (i) to vote more or less than one vote per share on any or all
matters voted by the stockholders, and (ii) to elect one or more
directors of the Corporation if there has been a default in the
payment of dividends on any one or more series of the Blank Check
Preferred or under such other circumstances and upon such other
condition as the Board of Directors may fix.
FIFTH: The name and mailing address of the Incorporator is as follows:
<TABLE>
<CAPTION>
NAME MAILING ADDRESS
---- ---------------
<S> <C>
ACFB Incorporated 2300 BP Tower
200 Public Square
Cleveland, Ohio 44114
</TABLE>
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized:
To make, alter or repeal the bylaws of the Corporation.
To authorize and cause to be executed mortgages and liens upon the
real property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
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By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the
Corporation.
When and as authorized by the stockholders in accordance with this
Amended and Restated Certificate of Incorporation and applicable statutes,
to sell, lease or exchange all or substantially all of the property and
assets of the Corporation, including its goodwill and its corporate
franchises, upon such terms and conditions and for such consideration
(which may consist, in whole or in part, of money or property, including
shares of stock in, and/or other securities of, any other corporation or
corporations) as the Corporation's Board of Directors shall deem
appropriate and in the best interests of the Corporation.
EIGHTH: Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the bylaws of the Corporation. Elections of directors
need not be by written ballot unless the bylaws of the Corporation shall so
provide.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
TENTH: No director shall be personally liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (1) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (2) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 174 of the Delaware General Corporation Law, or (4) for
any transaction from which the director derived an improper personal benefit. If
the Delaware General Corporation Law hereafter is amended to authorize the
further elimination or limitation of the liability of directors, then the
liability of a director of the Corporation, in addition to the limitations on
personal liability provided herein, shall be limited to the fullest extent
permitted by the amended Delaware General Corporation Law. Any repeal or
modification of this Article Tenth shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of the
Corporation existing at the time of such repeal or modification.
ELEVENTH: A. Each person who was or is made a party to or is threatened to
be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
by reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent, authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights
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than said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees, judgments,
fines, ERISA, excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in subsection B of this Article Eleventh, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Article Eleventh shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the Delaware General Corporation Law
requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Article
Eleventh or otherwise. The Corporation may, by action of its Board of Directors,
provide indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
B. If a claim under subsection A of this Article Eleventh is not paid in
full by the Corporation within thirty (30) days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
C. The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article Eleventh shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of this Certificate of
Incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
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D. The Corporation may 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
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
E. As used in this Article Eleventh, references to "the Corporation" shall
include, in addition to the resulting or surviving corporation, any constituent
corporation absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees and agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, shall stand in the same position under the
provisions of this Article Eleventh with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
F. If this Article Eleventh or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee and agent of the
Corporation as to expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including a grand jury
proceeding and an action by the Corporation, to the fullest extent permitted by
any applicable portion of this Article Eleventh that shall not have been
invalidated or by any other applicable law.
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IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed by a duly authorized officer as of the 28th day of April, 2000.
ATHERSYS, INC.
By: /s/ Gil Van Bokkelen
Name: Gil Van Bokkelen
Title: President and Chief Executive
Officer
102
