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CERTIFICATE OF INCORPORATION
OF
ADAYTUM SOFTWARE, INC.
To form a corporation pursuant .to the Delaware General Corporation
Law, the undersigned hereby certifies as follows:
ARTICLE 1.
The name of this corporation is Adaytum Software, Inc.
ARTICLE 2.
The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
ARTICLE 3.
This corporation shall have perpetual duration.
ARTICLE 4.
The registered office of this corporation in Delaware is 1209 Orange
Street, New Castle County, Wilmington, DE 19801, and the name of its registered
agent is The Corporation Trust Company.
ARTICLE 5.
A. AUTHORIZED SHARES.
The total number of shares of stock which this corporation is
authorized to issue is 70,000,000 shares, par value $.01 per share, of which
50,000,000 shares are designated as common stock and 20,000,000 shares are
undesignated preferred stock.
B. PREFERRED STOCK.
Authority is hereby expressly vested in the board of directors, subject
to the provisions of this Article 5 and to the limitations prescribed by law, to
authorize the issue front time to time of one or more series of preferred stock
and with respect to each such series to fix by resolution or resolutions adopted
by the affirmative vote of a majority of the whole board of directors providing
for the issue of such series the voting powers, full or limited, if any, of the
shares of such series and the designations, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof. The authority of the board of directors
with respect to each series shall include, but not be limited to, the
determination or fixing of the following:
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(1) The number of shares constituting such series and the
designation of such series.
(2) The dividend rate of such series, the conditions and dates
upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes or series of this corporation's capital stock, and whether such
dividends shall be cumulative or noncumulative.
(3) Whether the shares of such series shall be subject to
redemption by this corporation at the option of either this corporation
or the holder or both or upon the happening of a specified event, and,
if made subject to any such redemption, the times or events, prices and
other terms and conditions of such redemption.
(4) The terms and amount of any sinking fund provided for the
purchase or redemption of the shares of such series.
(5) Whether or not the shares of such series shall be
convertible into, or exchangeable for, at the option of either the
holder or this corporation or upon the happening of a specified event,
shares of any other class or classes or of any other series of the same
or any other class or classes of this corporation's capital stock, and,
if provision be made for conversion or exchange, the times or events,
prices, rates, adjustments, and other terms and conditions of such
conversions or exchanges.
(6) The restrictions, if any, on the issue or reissue of any
additional preferred stock, including increases or decreases in the
number of shares of any series subsequent to the issue of shares of
that series.
(7) The rights of the holders of the shares of such series
upon the voluntary or involuntary liquidation, dissolution or winding
up of this corporation.
(8) Any right to vote with holders of shares of any other
series or class and any right to vote as a class, either generally or
as a condition to specified corporate action, in addition to any voting
powers required by law.
ARTICLE 6.
In furtherance, and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, amend, alter,
change, add to or repeal bylaws of this corporation, without any action on the
part of the stockholders. The bylaws made by the directors may be amended,
altered, changed, added to or repealed by the stockholders. Any specific
provision in the bylaws regarding amendment thereof shall be controlling.
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ARTICLE 7.
A director of this corporation shall not be personally liable to this
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that this article shall not eliminate or
limit the liability of a director (a) for any breach of the director's duty of
loyalty to this corporation or its stockholders; (b) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (c) for the unlawful payment of dividends or unlawful stock repurchases
under Section 174 of the Delaware General Corporation Law; or (d) for any
transaction from which the director derived an improper personal benefit. This
article shall not eliminate or limit the liability of a director for any act or
omission occurring prior to the effective date of this article.
If the Delaware General Corporation Law is hereafter amended to
authorize any further limitation of the liability of a director, then the
liability of a director of this corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law, as
amended.
Any repeal or modification of the foregoing provisions of this article
by the stockholders of this corporation shall not adversely affect any right or
protection of a director of this corporation existing at the time of such repeal
or modification.
ARTICLE 8.
There shall be no cumulative voting by the shareholders of this
corporation.
ARTICLE 9.
The shareholders of this corporation shall not have any preemptive
rights to subscribe for or acquire securities or rights to purchase securities
of any class, kind, or series of this corporation.
ARTICLE 10.
The initial board of directors shall be comprised of:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Michael B. Gorman St. Paul Venture Capital
8500 Normandale, Suite 1940
Bloomington, MN 55437
John David "Guy" Haddleton 740 Mississippi River Blvd., Apt. 22E
St. Paul, MN 55116-1069
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Bernard R. Fisher Yew Tree Cottage
Milestone Avenue
Charvil on Thames
Berkshire
RG10 9TN
George Kunzle Suffolk Cottage
School Lane
Denmead
Waterlooville
Hants P07 6LY
Adrian E. Kunzle 107 West 25th Street, Apt. 55
New York, NY 10001
</TABLE>
ARTICLE 11.
The name and mailing address of the incorporator is:
Joseph W. Wirth Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402
Dated: July 21, 1998 /s/ Joseph W. Wirth
--------------------- ------------------------
Joseph W. Wirth
Incorporator
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ADAYTUM SOFTWARE, INC.
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF DESIGNATION
OF
RIGHTS AND PREFERENCES
OF
SERIES A PREFERRED STOCK, SERIES B PREFERRED STOCK,
SERIES C PREFERRED STOCK AND SERIES D PREFERRED STOCK
OF
ADAYTUM SOFTWARE, INC.
The undersigned Vice-President Finance & Administration of Adaytum
Software, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation") does hereby certify
that, pursuant to a written consent of the holders of (i) a majority of the
outstanding stock entitled to vote thereon, (ii) a majority of the outstanding
Common Stock, (iii) a majority of the outstanding Series A Preferred Stock, (iv)
a majority of the outstanding Series B Preferred Stock and (v) a majority of the
outstanding Series C Preferred Stock, the following Certificate of Amendment to
Certificate of Designation has been adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware, and that
such Certificate of Amendment to Certificate of Designation has not been
subsequently modified or rescinded:
RESOLVED, that pursuant to the authority granted to and vested in this
Board of Directors in accordance with the Certificate of Incorporation of the
Corporation, the rights and preferences of the three series of preferred stock
previously designated as Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock in the Certificate of Amendment to Certificate of
Designation, dated October 6, 1999 are hereby amended and restated as set forth
below.
FURTHER RESOLVED, that pursuant to the authority granted to and vested
in this Board of Directors in accordance with the Certificate of Incorporation
of the Corporation, a new series of preferred stock is hereby created, and that
the designation and amount thereof and the relative rights and preferences of
the shares of such series, are as follows:
1. SHARES AND CLASSES AUTHORIZED. One Million Five Hundred Forty-Four
Thousand (1,544,000) shares of the undesignated preferred stock, par
value $.01 per share, that are authorized by Article V.A of the
Corporation's Certificate of Incorporation are designated
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as Series A Preferred Stock (the "SERIES A PREFERRED"), Four Million
Three Hundred Fifty Thousand (4,350,000) shares of the undesignated
preferred stock, par value $.01 per share, that are authorized by
Article V.A of the Corporation's Certificate of Incorporation are
designated as Series B Preferred Stock (the "SERIES B PREFERRED"), Two
Million Seven Hundred Fifty Thousand One Hundred (2,750,100) shares of
the Corporation's undesignated preferred stock, par value $0.01 per
share, that are authorized by Article V.A of the Corporation's
Certificate of Incorporation are hereby designated as Series C
Preferred Stock (the "SERIES C PREFERRED") and Two Million, Forty Nine
Thousand, Six Hundred Twenty Four (2,049,624) shares of the
Corporation's undesignated preferred stock, par value $.01 per share,
that are authorized by Article V.A of the Corporation's Certificate of
Incorporation are hereby designated as Series D Preferred Stock (the
"SERIES D PREFERRED")(the Series A Preferred, the Series B Preferred,
the Series C Preferred and the Series D Preferred being collectively
referred to as the "PREFERRED STOCK").
2. DEFINITIONS. For purposes of this Certificate of Amendment to
Certificate of Designation (this "Certificate") the following
definitions shall apply and shall be equally applicable to both the
singular and plural forms of the defined terms:
2.1 "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of
Common Stock (including treasury shares) issued or sold (or,
pursuant to Section 7.13 and the other provisions of this
Certificate, deemed to be issued or sold) by the Corporation
after the Certificate Effective Date, other than shares of
Common Stock (i) issued or issuable upon conversion of the
Preferred Stock; (ii) issued or issuable upon exercise of the
Andersen Consulting Warrant; (iii) issued or issuable to
employees, directors or officers of, or advisors or
consultants to, the Corporation pursuant to stock option plans
or stock-based compensation plans approved by the Board (but
subject, in each case, to the restrictions in Section 3.7.E);
(iv) issued or issuable in any bona fide registered public
offering pursuant to a firm commitment underwriting authorized
by the Board; (v) issued or issuable by way of stock split or
stock dividend or similar capital modification; and (vi)
issued or issuable upon exercise of (a) a warrant of the
Corporation to be issued to Silicon Valley Bank and
representing the right to purchase 51,020 shares of Common
Stock at $5.86 per share, (b) that certain warrant of the
Corporation, dated as of June 8, 2000, issued to Dyadic
Systems Limited and representing the right to purchase up to
12,500 shares of Common Stock at $4.00 per share, (c) that
certain warrant of the Corporation, dated as of March 30,
2000, issued to Data Sales Company and representing the right
to purchase 5,674 shares of Common Stock at $5.86 per share
and (d) that certain warrant of the Corporation, dated as of
March 30, 2000, issued to Data Sales Company and representing
the right to purchase 4,266 shares of Common Stock at $5.86
per share.
2.2 "AFFILIATE" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with,
the indicated Person.
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2.3 "ANDERSEN CONSULTING WARRANT" shall mean the warrant of the
Corporation representing the right to purchase shares of
Common Stock, which warrant was issued pursuant to the Warrant
Issuance Agreement dated as of June 8, 2000 by and between the
Corporation and Andersen Consulting LLP, as the same may be
amended from time to time.
2.4 "BOARD" shall mean the Board of Directors of the Corporation.
2.5 "CERTIFICATE EFFECTIVE DATE" shall mean June 12, 2000.
2.6 "COMBINED DIRECTORS" shall mean the directors of the
Corporation elected by the holders of the Preferred Stock and
the Common Stock, voting together as a single class, pursuant
to Section 3.2.A below.
2.7 "COMMON STOCK DIVIDEND" shall mean a stock dividend declared
and paid on the Common Stock that is payable in shares of
Common Stock.
2.8 "CONVERSION PRICE" (i) when used in reference to the Series A
Preferred, shall have the meaning set forth in Section 7.1
below, (ii) when used in reference to the Series B Preferred,
shall have the meaning set forth in Section 7.2 below, (iii)
when used in reference to the Series C Preferred, shall have
the meaning set forth in Section 7.3 below and (iv) when used
in reference to the Series D Preferred, shall have the meaning
set forth in Section 7.4 below.
2.9 "CONVERSION RIGHTS" shall have the meaning set forth in
Section 7 below.
2.10 "CONVERTIBLE SECURITIES" shall mean evidences of indebtedness,
shares of stock or other securities which are at any time,
directly or indirectly, convertible into or exchangeable for
Additional Shares of Common Stock.
2.11 "CORPORATION" shall mean Adaytum Software, Inc., a Delaware
corporation.
2.12 "DIVIDEND RATE" (i) when used in reference to the Series B
Preferred shall mean $0.0944 per share per annum,
appropriately adjusted for any stock split, combination or
other recapitalization affecting the Series B Preferred and
dividends on such stock payable in shares of Series B
Preferred or Common Stock which occur after the Certificate
Effective Date, (ii) when used in reference to the Series C
Preferred shall mean $0.235629 per share per annum,
appropriately adjusted for any stock split, combination or
other recapitalization affecting the Series C Preferred and
dividends on such stock payable in shares of Series C
Preferred or Common Stock which occur after the Certificate
Effective Date and (iii) when used in reference to the Series
D Preferred shall mean $0.68408 per share per annum,
appropriately adjusted for any stock split, combination or
other recapitalization affecting the Series D Preferred and
dividends on such stock
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payable in shares of Series D Preferred or Common Stock which
occur after the Certificate Effective Date.
2.13 "EFFECTIVE PRICE" shall mean the price per share for
Additional Shares of Common Stock determined by dividing (i)
the aggregatc consideration received, or deemed under Sections
7.12 and 7.13 to have been received, by the Corporation for
such Additional Shares of Common Stock by (ii) the total
number of Additional Shares of Common Stock issued or sold, or
deemed to have been issued or sold by the Corporation under
Sections 7.12 and 7.13.
2.14 "PERSON" shall include all natural persons, corporations,
business trusts, associations, limited liability companies,
partnerships, joint ventures and other entities, governments,
agencies and political subdivisions.
2.15 "PREFERRED STOCK" shall have the meaning set forth in Section
1 above.
2.16 "QUALIFIED PUBLIC OFFERING" shall mean the consummation of the
first underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended, covering the offering and sale of Common Stock for
the account of the Corporation on a firm commitment basis in
which the aggregate gross proceeds received by the Corporation
at the public offering price equals or exceeds $20 million
(the "MINIMUM OFFERING PROCEEDS") and the public offering
price equals or exceeds $9.00 per share of Common Stock
(appropriately adjusted for subdivisions and combinations of
shares of Common Stock and dividends on Common Stock payable
in shares of Common Stock) (the "MINIMUM OFFERING PRICE"),
provided, however, that either or both of the Minimum Offering
Proceeds and the Minimum Offering Price may be reduced by the
majority vote of the aggregate number of shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series D
Preferred then outstanding, voting together as a single class.
2.17 "REDEMPTION DATE" shall have the meaning set forth in Section
6.3 below.
2.18 "REDEMPTION NOTICE" shall have the meaning set forth in
Section 6.3 below,
2.19 "REDEMPTION PRICE", when used in reference to the Series B
Preferred, Series C Preferred or Series D Preferred, shall
have the meaning set forth in the applicable provision of
Section 6.2 below.
2.20 "SERIES A PREFERRED" shall have the meaning set forth in
Section 1 above.
2.21 "SERIES B PREFERRED" shall have the meaning set forth in
Section 1 above.
2.22 "SERIES C PREFERRED" shall have the meaning set forth in
Section 1 above.
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2.23 "SERIES D PREFERRED" shall have the meaning set forth in
Section 1 above.
2.24 "SERIES B/C PREFERRED DIRECTOR" shall have the meaning set
forth in Section 3.2.A below.
2.25 "SERIES D PREFERRED DIRECTOR" shall have the meaning set forth
in Section 3.2.A below.
2.26 "SERIES B PURCHASE AGREEMENT" shall mean the Series B
Preferred Stock Purchase Agreement dated as of December 30,
1998 by and among the parties named therein, as the same may
be amended from time to time.
2.27 "SERIES C PURCHASE AGREEMENT" shall mean the Series C
Preferred Stock Purchase Agreement dated as of October 5, 1999
by and among the parties named therein, as the same may be
amended from time to tune.
2.28 "SERIES D PURCHASE AGREEMENT" shall mean the Series D
Preferred Stock Purchase Agreement dated as of June 8, 2000 by
and among the parties named therein, as the same may be
amended from time to time.
3. VOTING RIGHTS.
3.1 GENERAL. At all meetings of the stockholders of the
Corporation and in the case of any actions of stockholders in
lieu of a meeting, each holder of Preferred Stock shall have
that number of votes on all matters submitted to the
stockholders that is equal to the number of whole shares of
Common Stock into which such holder's shares of Preferred
Stock are then convertible, as provided in Section 7, at the
record date for the determination of the stockholders entitled
to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written
consent of such stockholders is effected. This provision for
determination of the number of votes to which each holder of
the Preferred Stock is entitled shall also apply in cases in
which the holders of the Series A Preferred, the Series B
Preferred, Series C Preferred or the Series D Preferred have
the right to vote either separately or together with one or
more classes as a separate class, as the case may be. Except
as may be otherwise provided in this Certificate, by agreement
or by law, the holders of the Common Stock and the holders of
the Preferred Stock shall vote together as a single class on
all actions to be taken by the stockholders of the
Corporation.
3.2 ELECTION OF DIRECTORS.
A. ALLOCATION OF BOARD SEATS. The holders of (i) the
Series B Preferred and Series C Preferred, voting
together as a single and separate class, shall be
entitled to elect one (1) director of the Corporation
(the "SERIES B/C PREFERRED DIRECTOR"), (ii) the
Series D Preferred, voting as separate class,
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shall be entitled to elect one (1) director of the
Corporation (the "SERIES D PREFERRED DIRECTOR"),
(iii) the Common Stock, voting as a separate class,
shall be entitled to elect one (1) director of the
Corporation and (iv) the Preferred Stock and the
Common Stock, voting together as a single and
separate class, shall have the right to elect two (2)
directors of the Corporation (collectively the
"COMBINED DIRECTORS"). For so long as any of the
Series B Purchase Agreement, the Series C Purchase
Agreement or the Series D Purchase Agreement is in
effect, upon the occurrence of an Event of Default
(as defined in Section 13 of each such Purchase
Agreement) under any such Purchase Agreement, unless
such Event of Default has been properly waived
pursuant to the terms of the applicable Purchase
Agreement, the holders of the Series B Preferred,
Series C Preferred and Series D Preferred, voting
together as a single and separate class, shall have
the right to remove one (1) of the Combined Directors
and to elect one (1) new director in place of such
Combined Director and shall retain such rights until
the earlier to occur of (A) the date on which the
Event of Default has been cured or (B) the date of an
agreement between the Corporation and the holders of
a majority of the then outstanding shares of Series B
Preferred, Series C Preferred and Series D Preferred,
voting together as a single and separate class.
B. QUORUMS. At any meeting held for the purpose of
electing directors, (i) the presence in person or by
proxy of the holders of a majority of the aggregate
number of shares of Series B Preferred and Series C
Preferred then outstanding shall constitute a quorum
of the Series B Preferred and Series C Preferred for
the election of directors to be elected solely by the
holders of the Series B Preferred and Series C
Preferred voting together as a single and separate
class, (ii) the presence in person or by proxy of the
holders of a majority of the aggregate number of
shares of Series D Preferred then outstanding shall
constitute a quorum of the Series D Preferred for the
election of directors to be elected solely by the
holders of the Series D Preferred, (iii) the presence
in person or by proxy of the holders of a majority of
the aggregate number of shares of the Common Stock
then outstanding shall constitute a quorum of the
Common Stock for the election of directors to be
elected solely by the holders of the Common Stock and
(iv) the presence in person or by proxy of the
holders of a majority of the aggregate number of
shares of the Common Stock then outstanding and the
presence in person or by proxy of the holders of a
majority of Preferred Stock then outstanding shall
constitute a quorum of the Common Stock and the
Preferred Stock for the election of directors to be
elected by the holders of the Common Stock and the
Preferred Stock voting together as a single and
separate class.
C. VACANCIES. A vacancy in any directorship (i) elected
by the holders of the Series B Preferred and Series C
Preferred voting together as a single and
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separate class shall be filled only by vote of the
holders of the Series B Preferred and Series C
Preferred as provided above, (ii) elected by the
holders of the Series D Preferred shall be filled
only by vote of the holders of the Series D Preferred
as provided above, (iii) elected by the holders of
the Common Stock shall be filled only by vote of the
holders of the Common Stock as provided above and
(iv) elected by the holders of the Common Stock and
the Preferred Stock voting together as a single class
shall be filled only by vote of the holders of the
Common Stock and the Preferred Stock voting together
as a single and separate class as provided above.
3.3 ADDITIONAL CLASS VOTES BY THE SERIES A PREFERRED. For so long
as at least twenty percent (20%) of the aggregate number of
shares of Series A Preferred issued and outstanding as of the
close of business on December 31, 1998 are outstanding, the
Corporation shall not, without the affirmative vote of a
majority of the then outstanding shares of Series A Preferred
(voting as a separate class) take any action that constitutes
or results in amendment or waiver of any provision of the
Corporation's Certificate of Incorporation or Bylaws if such
amendment or waiver in any way adversely affects, alters or
changes any existing rights, preferences, privileges or
provisions relating to the Series A Preferred or the holders
thereof.
3.4 ADDITIONAL CLASS VOTES BY THE SERIES B PREFERRED. For so long
as at least twenty percent (20%) of the aggregate number of
shares of Series B Preferred issued pursuant to the Series B
Purchase Agreement are outstanding, the Corporation shall not,
without the affirmative vote of a majority of the then
outstanding shares of Series B Preferred voting as a separate
class:
A. take any action that constitutes or results in
amendment or waiver of any provision of the
Corporation's Certificate of Incorporation or Bylaws
if such amendment or waiver in any way affects,
alters or changes any existing rights, preferences,
privileges or provisions relating to the Series B
Preferred or the holders thereof; or
B. authorize or issue any new class of additional shares
of capital stock of the Corporation having priority
over the Series B Preferred or ranking in parity with
the Series B Preferred (including any additional
shares of Series B Preferred) as to the payment or
distribution of assets upon the liquidation or
dissolution, voluntary or involuntary, of the
Corporation.
3.5 ADDITIONAL CLASS VOTES BY THE SERIES C PREFERRED. For so long
as at least twenty percent (20%) of the aggregate number of
shares of Series C Preferred issued pursuant to the Series C
Purchase Agreement are outstanding, the Corporation shall not
without, the affirmative vote of a majority of the then
outstanding shares of Series C Preferred voting as a separate
class:
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A. take any action that constitutes or results in
amendment or waiver of any provision of the
Corporation's Certificate of Incorporation or Bylaws
if such amendment or waiver in any way affects,
alters or changes any existing rights, preferences,
privileges or provisions relating to the Series C
Preferred or the holders thereof; or
B. authorize or issue any new class of additional shares
of capital stock of the Corporation having priority
over the Series C Preferred or ranking in parity with
the Series C Preferred (including any other
additional shares of Series C Preferred) as to the
payment or distribution of assets upon the
liquidation or dissolution, voluntary or involuntary,
of the Corporation.
3.6 ADDITIONAL CLASS VOTES BY THE SERIES D PREFERRED. For so long
as at least twenty percent (20%) of the aggregate number of
shares of Series D Preferred issued pursuant to the Series D
Purchase Agreement are outstanding, the Corporation shall not,
without the affirmative vote of a majority of the then
outstanding shares of Series D Preferred voting as a separate
class:
A. take any action that constitutes or results in
amendment or waiver of any provision of the
Corporation's Certificate of Incorporation or Bylaws
if such amendment or waiver in any way affects,
alters or changes any existing rights, preferences,
privileges or provisions relating to the Series D
Preferred or the holders thereof; or
B. authorize or issue any new class of additional shares
of capital stock of the Corporation having priority
over the Series D Preferred or ranking in parity with
the Series D Preferred (including any other
additional shares of Series D Preferred) as to the
payment or distribution of assets upon the
liquidation or dissolution, voluntary or involuntary,
of the Corporation.
3.7 ADDITIONAL CLASS VOTES BY THE PREFERRED STOCK. For so long as
at least twenty percent (20%) of the aggregate number of
shares of Series B Preferred, Series C Preferred and Series D
Preferred outstanding on the Certificate Effective Date remain
outstanding, the Corporation shall not without the affirmative
vote of a majority of the then outstanding shares of the
Preferred Stock, voting together as a single and separate
class:
A. take any action that constitutes or results in the
redemption of any share(s) of Common Stock or
Preferred Stock other than redemptions pursuant to
Section 6 hereof, or an isolated redemption,
repurchase or other acquisition for cash of shares
under the provisions of the Corporation's stock
option, restricted stock or other equity compensation
plans or other employee agreements; or
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B. sell, lease, license (on an exclusive basis) or
otherwise dispose of all or substantially all of the
assets of the Corporation or of any subsidiary of the
Corporation, or consolidate with or merge into any
other corporation or entity, or permit any other
corporation or entity to consolidate or merge into
the Corporation or any subsidiary of the Corporation,
or enter into a plan of exchange with any other
corporation or entity, or otherwise acquire any other
corporation or entity; or
C. take any action constituting or resulting in a
liquidation, dissolution or winding up of the
Corporation; or
D. take any action that constitutes or results in a
change to the size of the Board; or
E. take any action that constitutes or results in the
number of shares of capital stock issued or issuable
to employees, directors or officers of, or advisors
or consultants to, the Corporation pursuant to stock
option plans and stock-based compensation plans
approved by the Board exceeding 4,195,000 shares
(appropriately adjusted for any stock split,
combination or other recapitalization and dividends
payable in shares of capital stock); or
F. authorize a payment of a cash dividend or other
distribution on any class of capital stock.
4. DIVIDENDS.
4.1 DIVIDEND PREFERENCE. The holders of each share of Series B
Preferred, Series C Preferred and Series D Preferred then
outstanding shall be entitled to receive non-cumulative
dividends, out of any funds and assets of the Corporation
legally available therefor, prior and in preference to any
declaration or payment of any dividend payable on Common Stock
of the Corporation (other than a Common Stock Dividend) or on
the Series A Preferred at the annual Dividend Rate for the
Series B Preferred, Series C Preferred or Series D Preferred,
as applicable, if, as and when declared by the Board. No
dividend or distribution shall be declared or made to
outstanding shares of any of the Series B Preferred, Series C
Preferred or Series D Preferred unless a dividend or
distribution is declared or made to all outstanding shares of
Series B Preferred, Series C Preferred and Series D Preferred.
4.2 OTHER DIVIDENDS. Except as set forth in Section 4.1 above, no
dividend or other distribution shall accrue or be paid with
respect to any shares of capital stock of the Corporation for
any period, whether before or after the Certificate Effective
Date, unless and until (i) declared by the Board and (ii)
approved by the holders of the Preferred Stock in accordance
with Section 3.71.
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4.3 NON-CASH DIVIDENDS. Whenever a dividend provided for in this
Section 4 shall be payable in property other than cash, the
value of such dividend shall be deemed to be the fair market
value of such property as determined in good faith by the
Board.
4.4 PAYMENTS ON CONVERSION. If the Corporation shall have declared
but unpaid dividends with respect to any Series B Preferred,
Series C Preferred or Series D Preferred upon the conversion
of such class as provided in Section 7, then all such declared
but unpaid dividends on such converted shares shall be
canceled.
5. LIQUIDATION RIGHTS.
5.1 PREFERENCE OF SERIES B PREFERRED, SERIES C PREFERRED AND
SERIES D PREFERRED. In the event of any liquidation,
dissolution or winding up of the Corporation, whether
voluntary or involuntary, the holders of the Series B
Preferred, Series C Preferred and Series D Preferred then
outstanding shall be entitled to be paid out of the assets of
the Corporation available for distribution to its
stockholders, whether such assets are capital, surplus, or
earnings, before any payment or declaration and setting apart
for payment of any amount shall be made in respect of the
Common Stock or the Series A Preferred, an amount equal to (a)
(i) $1.18 per share of Series B Preferred held,
(ii) $2.9453584 per share of Series C Preferred held and
(iii) $8.551 per share of Series D Preferred held (all amounts
subject to appropriate adjustments for stock splits and other
combinations in the same manner as set forth in Sections 7.11,
7.12 and 7.13) plus (b) for each share of Series B Preferred,
Series C Preferred and Series D Preferred held, dividends
thereon, if declared and unpaid, to and including the date
full payment shall be tendered to the holders of the Series B
Preferred, Series C Preferred and Series D Preferred with
respect to such liquidation, dissolution or winding up. After
receiving the full amounts aforesaid, the holders of the
Series B Preferred, Series C Preferred and Series D Preferred
shall not be entitled to any further payment. If, upon any
liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, the assets to be distributed
to the holders of Series B Preferred, Series C Preferred and
Series D Preferred shall be insufficient to permit the payment
to such stockholders of the full preferential amounts
aforesaid, then all of the assets of the Corporation shall be
distributed ratably to the holders of the Series B Preferred,
Series C Preferred and Series D Preferred on a pari passu
basis.
5.2 REMAINING ASSETS. If the assets of the Corporation available
for distribution to the Corporation's stockholders exceed the
aggregate amount payable to the holders of the outstanding
Series B Preferred, Series C Preferred and Series D Preferred
pursuant to Section 5.1 hereof, then after the payments
required by Section 5.1 shall have been made or irrevocably
set apart, such assets shall be distributed equally, on a per
share and an as converted basis, among the holders of
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the Common Stock and the outstanding Series A Preferred. If
there are no shares of Series A Preferred outstanding, such
assets shall be distributed equally, on a per share basis,
among the holders of the Common Stock.
5.3 REORGANIZATION; SALE OF ASSETS. The merger, acquisition or
consolidation of the Corporation into or with any other entity
or entities which results in the exchange of outstanding
shares of the Corporation for securities or other
consideration issued or paid or caused to be issued or paid by
any such entity or Affiliate thereof pursuant to which the
stockholders of the Corporation immediately prior to the
transaction do not own a majority of the outstanding shares of
the surviving corporation immediately after the transaction,
or any sale, lease, license (on an exclusive basis) or
transfer by the Corporation of all or substantially all its
assets, shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of the
provisions of this Section 5 unless this provision is waived
by the affirmative vote of at least a majority of the shares
of the Preferred Stock (voting together as a single and
separate class) outstanding.
5.4 NOTICE. Written notice of such liquidation, dissolution or
winding up, stating a payment date and the place where said
payments shall be made, shall be given by mail, postage
prepaid, or by telex, facsimile or courier service to non-U.S.
residents, not less than twenty (20) days prior to the payment
date stated therein, to the holders of record of Preferred
Stock, such notice to be addressed to each such holder at its
address as shown on the records of the Corporation.
5.5 DETERMINATION OF CONSIDERATION. To the extent any distribution
pursuant to Section 5.1 or Section 5.2 consists of property
other than cash, the value thereof shall, for purposes of
Section 5.1 or Section 5.2, be the fair value at the time of
such distributions as determined in good faith by the Board.
5.6 CONVERSION PRIOR TO LIQUIDATING DISTRIBUTIONS. Any holder of
the Preferred Stock may, at its option, convert all or a
portion of its shares into Common Stock upon the occurrence of
an event described in Section 5.3 and thereby receive
distributions with the holders of the Common Stock in lieu of
receiving distributions with the holders of the Preferred
Stock.
6. REDEMPTION RIGHTS.
6.1. SCHEDULED REDEMPTIONS. To the extent the Corporation shall
have funds legally available for such payments, the
Corporation shall offer to redeem all shares of outstanding
Series B Preferred, Series C Preferred and Series D Preferred
in three (3) equal installments within 60 days of each of
December 31, 2005, December 31, 2006 and December 31, 2007
(the date on which each such offer is made being referred to
as a "scheduled redemption date" and, individually, the "first
scheduled redemption date," the "second scheduled redemption
date" and the "third scheduled redemption date,"
respectively). The shares to be redeemed shall
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be determined pro rata among the holders of shares of the
Series B Preferred, Series C Preferred and Series D Preferred,
respectively. The holders of shares of the Series B Preferred,
Series C Preferred and Series D Preferred offered to be
redeemed shall have the option on each scheduled redemption
date to either accept or reject the offer as to the one-third
of their shares covered by such offer. The rejection on any
one scheduled redemption date by a holder of shares for which
the offer of redemption has been made shall not be deemed to
be a rejection of an offer of redemption for any other shares
to be made on any future scheduled redemption date. If a
holder of Series B Preferred, Series C Preferred or Series D
Preferred rejects any offer of redemption of any shares of
Series B Preferred, Series C Preferred or Series D Preferred,
the Corporation shall not have any further obligation to
redeem the shares covered by that offer under this Section
6.1.
If the Corporation shall fail to discharge all or any part of
any scheduled redemption obligation pursuant to this Section
6.1 because insufficient funds are legally available therefor,
the entire amount legally available for the payment of such
obligation shall be used to offer to and redeem (i) the number
of shares of Series B Preferred as is equal to the whole
number obtained when truncating the product of (A) the full
number of shares of Series B Preferred for which an offer of
redemption would be required if sufficient funds were legally
available therefor, multiplied by (B) a fraction, the
numerator of which is the amount of funds legally available to
redeem the Series B Preferred, Series C Preferred and Series D
Preferred and the denominator of which is the amount of funds
that would be required to redeem the full number of shares of
Series B Preferred, Series C Preferred and Series D Preferred
if sufficient funds were legally available therefor, (ii) the
number of shares of Series C Preferred as is equal to the
whole number obtained when truncating the product of (A) the
full number of shares Series C Preferred for which an offer of
redemption would be required if sufficient funds were legally
available therefor, multiplied by (B) a fraction, the
numerator of which is the amount of funds legally available to
redeem the Series B Preferred, Series C Preferred and Series D
Preferred and the denominator of which is the amount of funds
that would be required to redeem the full number of shares of
Series B Preferred, Series C Preferred and Series D Preferred
if sufficient funds were legally available therefor and (iii)
the number of shares of Series D Preferred as is equal to the
whole number obtained when truncating the product of (A) the
full number of shares Series D Preferred for which an offer of
redemption would be required if sufficient funds were legally
available therefor, multiplied by (B) a fraction, the
numerator of which is the amount of funds legally available to
redeem the Series B Preferred, Series C Preferred and Series D
Preferred and the denominator of which is the amount of funds
that would be required to redeem the full number of shares of
Series B Preferred, Series C Preferred and Series D Preferred
if sufficient funds were legally available therefor. The
shares of the holders of the Series B Preferred, Series C
Preferred and Series D Preferred shall be redeemed ratably in
proportion to the full number of shares
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which they would otherwise be entitled to have redeemed, and
the balance of such mandatory redemption obligation shall be
discharged as soon as the Corporation shall have funds legally
available to permit such redemption, at which time the Board
shall promptly fix a date for such redemption and so notify
the holders of such shares in writing.
6.2 PRICE. In the case of any scheduled redemption date under
Section 6.1, (i) the redemption price of the Series B
Preferred (the "SERIES B REDEMPTION PRICE") shall be an amount
per share equal to $1.18, (ii) the redemption price of the
Series C Preferred shall be an amount per share equal to
$2.9453584 (the "SERIES C REDEMPTION PRICE") and (iii) the
redemption price of the Series D Preferred shall be an amount
per share equal to $8.551 (the "SERIES D REDEMPTION PRICE")
plus, in each case, all declared but unpaid dividends thereon
to and including the applicable Redemption Date (as
hereinafter defined). Each of the Series B Redemption Price,
the Series C Redemption Price and the Series D Redemption
Price shall be subject to adjustment as provided in Sections
6.6 and 6.7 hereof.
6.3 REDEMPTION NOTICE. The Corporation shall, not less than thirty
(30) days or more than sixty (60) days prior to the date fixed
for redemption ("REDEMPTION DATE"), mail written notice
("REDEMPTION NOTICE"), postage prepaid, to each holder of
shares of record of Series B Preferred, Series C Preferred or
Series D Preferred to be redeemed, at such holder's address
last shown on the records of the Corporation. The Redemption
Notice shall state:
A. the total number of shares of Series B Preferred,
Series C Preferred and Series D Preferred which the
Corporation is required to offer to redeem;
B. the number of shares of Series B Preferred, Series C
Preferred or Series D Preferred, as applicable, held
by the holder which the Corporation intends to offer
to redeem;
C. the Redemption Date and Redemption Price; and
D. the time, place and manner in which the holder may
elect to surrender to the Corporation the certificate
or certificates representing the shares of Series B
Preferred, Series C Preferred or Series D Preferred,
as applicable, to be redeemed.
6.4 SURRENDER OF STOCK. On or before the Redemption Date, each
holder of shares of Series B Preferred, Series C Preferred or
Series D Preferred, as applicable, electing to redeem his, her
or its shares shall surrender the certificate of certificates
representing such shares to the Corporation, in the manner and
at the place designated in the Redemption Notice, and
thereupon the Redemption Price for such shares shall be
payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof, and each
surrendered
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certificate shall be canceled and retired. In the event less
than all of the shares represented by such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares.
6.5 TERMINATION OF RIGHTS. If the Redemption Notice is duly given,
and if, on or prior to the Redemption Date, a holder of the
Series B Preferred, Series C Preferred or Series D Preferred
elects to have her, his or its shares redeemed and the
Redemption Price is either paid or made available for payment,
then notwithstanding that the certificates evidencing any of
the shares of Series B Preferred, Series C Preferred or Series
D Preferred so called for redemption have not been
surrendered, all rights with respect to such shares shall
forthwith after the Redemption Date cease and terminate,
except only (i) the right of such holder to receive the Series
B Redemption Price, the Series C Redemption Price or the
Series D Redemption Price, as applicable, without interest
upon surrender of his, her, or its certificates therefor or
(ii) the right to receive Common Stock upon exercise of the
conversion rights as provided in Section 7 hereof on or prior
to the Redemption Date.
6.6 ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation at any time or from time to time after the
Certificate Effective Date effects a subdivision of the
outstanding shares of Series B Preferred, Series C Preferred
or the Series D Preferred, the Series B Redemption Price, the
Series C Redemption Price or the Series D Redemption Price, as
applicable, then in effect immediately before the subdivision
shall be proportionately decreased, and conversely, if the
Corporation at any time or from time to time after the
Certificate Effective Date combines the outstanding shares of
Series B Preferred, Series C Preferred or the Series D
Preferred into a smaller number of shares, the Series B
Redemption Price, the Series C Redemption Price or the Series
D Redemption Price, as applicable, in effect immediately
before the combination shall be proportionately increased. Any
adjustment under this Section 6.6 shall become effective at
the close of business on the date the subdivision or
combination becomes effective.
6.7 ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS.
A. SERIES B PREFERRED ADJUSTMENT. If the Corporation at
any time or from time to time after the Certificate
Effective Date makes or issues or fixes a record date
for the determination of holders of shares of Series
B Preferred entitled to receive a dividend or other
distribution payable in additional shares of Series B
Preferred, then and in each such event the Series B
Redemption Price then in effect shall be decreased as
of the time of such issuances or, in the event such
record date is fixed, as of the close of business on
such record date, by multiplying the Series B
Redemption Price then in effect by a fraction (1) the
numerator of which is the total number of shares of
Series B Preferred issued and outstanding immediately
prior to the time of such issuance or the close of
business on
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such record date, and (2) the denominator of which
shall be the total number of shares of Series B
Preferred issued and outstanding immediately prior to
the time of such issuance or the close of business on
such record date plus the number of shares of Series
B Preferred issuable in payment of such dividend or
distribution; provided, however, that if such record
date is fixed and such dividend is not fully paid or
if such distribution is not fully made on the date
fixed therefor, the Series B Redemption Price shall
be recomputed accordingly as of the close of business
on such record date and thereafter the Series B
Redemption Price shall be adjusted pursuant to this
subsection 6.7.A as of the time of actual payment of
such dividends or distributions.
B. SERIES C PREFERRED ADJUSTMENT. If the Corporation at
any time or from time to time after the Certificate
Effective Date makes or issues or fixes a record date
for the determination of holders of shares of Series
C Preferred entitled to receive a dividend or other
distribution payable in additional shares of Series C
Preferred, then and in each such event the Series C
Redemption Price then in effect shall be decreased as
of the time of such issuances or, in the event such
record date is fixed, as of the close of business on
such record date, by multiplying the Series C
Redemption Price then in effect by a fraction (1) the
numerator of which is the total number of shares of
Series C Preferred issued and outstanding immediately
prior to the time of such issuance or the close of
business on such record date, and (2) the denominator
of which shall be the total number of shares of
Series C Preferred issued and outstanding immediately
prior to the time of such issuance or the close of
business on such record date plus the number of
shares of Series C Preferred issuable in payment of
such dividend or distribution; provided, however,
that if such record date is fixed and such dividend
is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Series C
Redemption Price shall be recomputed accordingly as
of the close of business on such record date and
thereafter the Series C Redemption Price shall be
adjusted pursuant to this subsection 6.7.B as of the
time of actual payment of such dividends or
distributions.
C. SERIES D PREFERRED ADJUSTMENT. If the Corporation at
any time or from time to time after the Certificate
Effective Date makes or issues or fixes a record date
for the determination of holders of shares of Series
D Preferred entitled to receive a dividend or other
distribution payable in additional shares of Series D
Preferred, then and in each such event the Series D
Redemption Price then in effect shall be decreased as
of the time of such issuances or, in the event such
record date is fixed, as of the close of business on
such record date, by multiplying the Series D
Redemption Price then in effect by a fraction (1) the
numerator of which is the total number of shares of
Series D Preferred issued and outstanding
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immediately prior to the time of such issuance or the
close of business on such record date, and (2) the
denominator of which shall be the total number of
shares of Series D Preferred issued and outstanding
immediately prior to the time of such issuance or the
close of business on such record date plus the number
of shares of Series D Preferred issuable in payment
of such dividend or distribution; provided, however,
that if such record date is fixed and such dividend
is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Series D
Redemption Price shall be recomputed accordingly as
of the close of business on such record date and
thereafter the Series D Redemption Price shall be
adjusted pursuant to this subsection 6.7.C as of the
tune of actual payment of such dividends or
distributions
6.8 OTHER REDEMPTIONS. Other than the scheduled redemptions
provided for in Section 6.1, the Corporation shall not,
without (i) following the provisions of Section 3.7.A and (ii)
the prior consent of a majority of the Board (including the
affirmative vote of the Series B/C Preferred Director and the
Series D Preferred Director), purchase or set aside any sums
for the purchase of shares of Common Stock, except for the
purchase of Common Stock from former employees of the
Corporation who acquired such shares directly from the
Corporation, if such purchase is made pursuant to contractual
rights relating to the termination of employment of such
former employee that were approved by a majority of the Board.
7. CONVERSION. The holders of the Preferred Stock shall have the following
conversion rights (the "CONVERSION RIGHTS"):
7.1 OPTIONAL CONVERSION OF THE SERIES A PREFERRED. The Series A
Preferred shall be convertible, without the payment of any
additional consideration by the holder thereof and at the
option of the holder thereof, at any time after the first
issuance of shares of Series A Preferred by the Corporation,
at the office of the Corporation or any transfer agent for the
Common Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $0.62 by
the Series A Conversion Price, determined as hereinafter
provided, in effect at the time of conversion and then
multiplying such quotient by the number of shares of Series A
Preferred to be converted. The conversion price at which
shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the
holder thereof (the "SERIES A CONVERSION PRICE") shall on the
Certificate Effective Date initially be $0.62 in the case of
the Series A Preferred. Such initial Series A Conversion Price
shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which the Series A Preferred is
convertible, as hereinafter provided.
7.2 OPTIONAL CONVERSION OF THE SERIES B PREFERRED. The Series B
Preferred shall be convertible, without the payment of any
additional consideration by the holder
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thereof and at the option of the holder thereof, at any time
after the first issuance of shares of Series B Preferred by
the Corporation, at the office of the Corporation or any
transfer agent for the Common Stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined
by dividing $1.18 by the Series B Conversion Price, determined
as hereinafter provided, in effect at the time of conversion
and then multiplying such quotient by the number of shares of
Series B Preferred to be converted. The conversion price at
which shares of Common Stock shall be deliverable upon
conversion without the payment of any additional consideration
by the holder thereof (the "SERIES B CONVERSION PRICE") shall
on the Certificate Effective Date initially be $1.18 in the
case of the Series B Preferred. Such initial Series B
Conversion Price shall be subject to adjustment, in order to
adjust the number of shares of Common Stock into which the
Series B Preferred is convertible, as hereinafter provided.
7.3 OPTIONAL CONVERSION OF THE SERIES C PREFERRED. The Series C
Preferred shall be convertible, without the payment of any
additional consideration by the holder thereof and at the
option of the holder thereof, at any time after the first
issuance of shares of Series C Preferred by the Corporation,
at the office of the Corporation or any transfer agent for the
Common Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $2.9453584
by the Series C Conversion Price, determined as hereinafter
provided, in effect at the time of conversion and then
multiplying such quotient by the number of shares of Series C
Preferred to be converted. The conversion price at which
shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the
holder thereof (the "SERIES C CONVERSION PRICE") shall on the
Certificate Effective Date initially be $2.9453584 in the case
of the Series C Preferred. Such initial Series C Conversion
Price shall be subject to adjustment, in order to adjust the
number of shares of Common Stock into which the Series C
Preferred is convertible, as hereinafter provided.
7.4 OPTIONAL CONVERSION OF THE SERIES D PREFERRED. The Series D
Preferred shall be convertible, without the payment of any
additional consideration by the holder thereof and at the
option of the holder thereof, at any time after the first
issuance of shares of Series D Preferred by the Corporation,
at the office of the Corporation or any transfer agent for the
Common Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing $8.551 by
the Series D Conversion Price, determined as hereinafter
provided, in effect at the time of conversion and then
multiplying such quotient by the number of shares of Series D
Preferred to be converted. The conversion price at which
shares of Common Stock shall be deliverable upon conversion
without the payment of any additional consideration by the
holder thereof (the "SERIES D CONVERSION PRICE") shall on the
Certificate Effective Date initially be $8.551 in the case of
the Series D Preferred. Such initial Series D Conversion Price
shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which the Series D Preferred is
convertible, as hereinafter provided.
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7.5 AUTOMATIC CONVERSION OF THE SERIES A PREFERRED AND SERIES B
PREFERRED. If at any time (a) the Corporation shall complete a
Qualified Public Offering or (b) the holders of at least a
majority in interest of the aggregate number of outstanding
shares of Series A Preferred and Series B Preferred, voting
together as a single and separate class, shall consent in
writing to the conversion of the Series A Preferred and Series
B Preferred into shares of Common Stock, then effective upon
(i) the closing of such Qualified Public Offering or (ii) such
vote of the holders of the Series A Preferred and Series B
Preferred, as the case may be, all outstanding shares of
Series A Preferred and Series B Preferred shall automatically
convert into the number of shares of Common Stock as is
provided for in Section 7.1 or 7.2, as applicable.
7.6 AUTOMATIC CONVERSION OF THE SERIES C PREFERRED. If at any time
(a) the Corporation shall complete a Qualified Public Offering
or (b) the holders of at least a majority in interest of the
aggregate number of outstanding shares of Series C Preferred
shall consent in writing to the conversion of the Series C
Preferred, then effective upon (i) the closing of such
Qualified Public Offering or (ii) such vote of the holders of
the Series C Preferred, as the case may be, all outstanding
shares of Series C Preferred shall automatically convert into
the number of shares of Common Stock as is provided for in
Section 7.3.
7.7 AUTOMATIC CONVERSION OF THE SERIES D PREFERRED. If at any time
(a) the Corporation shall complete a Qualified Public Offering
or (b) the holders of at least a majority in interest of the
aggregate number of outstanding shares of Series D Preferred
shall consent in writing to the conversion of the Series D
Preferred, then effective upon (i) the closing of such
Qualified Public Offering or (ii) such vote of the holders of
the Series D Preferred, as the case may be, all outstanding
shares of Series D Preferred shall automatically convert into
the number of shares of Common Stock as is provided for in
Section 7.4.
7.8 FRACTIONAL SHARES. No fractional shares of Common Stock shall
be issued upon conversion of the Preferred Stock. In lieu of
any fractional share to which any holder would otherwise be
entitled upon conversion of some or all of the Preferred Stock
owned by such holder, the Corporation shall pay cash equal to
such fraction multiplied by the then effective Conversion
Price for such series of Preferred Stock.
7.9 MECHANICS OF OPTIONAL CONVERSION. Before any holder of
Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the
certificate or certificates therefor, endorsed or accompanied
by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the
registered holder or by such holder's attorney duly authorized
in writing, at the office of the Corporation or of any
transfer agent for the Common Stock, and shall give at least
five (5) days' prior written notice to
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the Corporation at such office that such holder elects to
convert the same and shall state therein such holder's name or
the name of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be
issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of
Preferred Stock, or to such holder's nominee or nominees, a
certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid,
together with cash in lieu of any fraction of a share. Such
conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the
certificate or certificates representing the shares of
Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
From and after such date, all rights of the holder with
respect to the Preferred Stock so converted shall terminate,
except only the right of such holder to receive certificates
for the number of shares of Common Stock issuable upon
conversion thereof and cash for any fraction of a share.
7.10 MECHANICS OF AUTOMATIC CONVERSION. All holders of record of
shares of Preferred Stock will be given at least twenty (20)
days' prior written notice of the anticipated date of any
automatic conversion referenced in Section 7.5, Section 7.6 or
Section 7.7 and at least two (2) days' prior written notice of
the actual date of such conversion. The Corporation shall also
exercise its best efforts to provide at least three (3) days'
telephonic notice of such actual conversion date to said
holders. Each such notice shall designate a place for
automatic conversion of all of the shares of such Preferred
Stock pursuant to Section 7.5, Section 7.6 or Section 7.7, as
applicable. Such notices will be sent by mail, first class,
postage prepaid to each record holder of Preferred Stock at
such holder's address appearing on the Corporation's stock
register, or by overnight courier service in the case of the
notice prior to the actual date of conversion. From and after
the date fixed for conversion, each holder of shares of
Preferred Stock shall, following surrender of such holder's
certificate or certificates representing such shares to the
Corporation at the place designated in such notice, be
entitled to receive certificates for the number of shares of
Common Stock or other securities to which such holder is
entitled. On the date fixed for conversion, all rights with
respect to the Preferred Stock will terminate, except only (i)
any rights to receive declared but unpaid dividends with a
record date preceding the date of conversion, and (ii) the
rights of the holders thereof, upon surrender of their
certificate or certificates therefor, to receive certificates
for the number of shares of Common Stock or other securities
into which such Preferred Stock has been converted and cash
for fractional shares. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly
executed by the registered holder or by her, his or its
attorney duly authorized in writing. All certificates
evidencing shares of Preferred Stock which are required
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to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the date such
certificates are so required to be surrendered, be deemed to
have been retired and canceled and the shares of Preferred
Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders
thereof to surrender such certificates. As soon as practicable
after the date of such automatic conversion and the surrender
of the certificate or certificates for Preferred Stock as
aforesaid, the Corporation shall cause to be issued and
delivered to such holder, or to her, his or its written order,
a certificate or certificates for the number of full shares of
Common Stock or other securities issuable on such conversion
in accordance with the provisions hereof and cash as provided
in Section 7.8 in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
7.11 CERTAIN ADJUSTMENTS TO CONVERSION PRICE FOR STOCK SPLITS,
DIVIDENDS, MERGERS, REORGANIZATIONS, ETC.
A. ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS AND
COMBINATIONS OF COMMON STOCK. In the event the
outstanding shares of Common Stock shall, after the
Certificate Effective Date be further subdivided
(split), or combined (reverse split), by
reclassification or otherwise, or in the event of any
dividend or other distribution payable on the Common
Stock in shares of Common Stock, the applicable
Conversion Price in effect immediately prior to such
subdivision, combination, dividend or other
distribution shall, concurrently with the
effectiveness of such subdivision, combination,
dividend or other distribution, be proportionately
adjusted.
B. ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC. In the
event of a reclassification, reorganization or
exchange (other than described in subsection 7.11.A
above) or any consolidation or merger of the
Corporation with another Corporation (other than a
merger, acquisition or other reorganization as
defined in Section 5.3, which shall be considered a
liquidation pursuant to Section 5 above unless waived
pursuant to Section 5.3), each share of Preferred
Stock shall thereafter be convertible into the number
of shares of stock or other securities or property to
which a holder of the number of shares of Common
Stock of the Corporation deliverable upon conversion
of the Preferred Stock would have been entitled upon
such reclassification, reorganization, exchange,
consolidation, merger or conveyance had the
conversion occurred immediately prior to the event;
and, in any such case, appropriate adjustment (as
determined by the Board) shall be made in the
application of the provisions herein set forth with
respect to the rights and interests thereafter of the
holders of the Preferred Stock, to the end that the
provisions set forth herein (including provisions
with respect to changes in and other adjustments of
the applicable Conversion Price) shall thereafter be
applicable, as nearly as
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reasonably may be, in relation to any shares of stock
or other property thereafter deliverable upon the
conversion of the Preferred Stock.
C. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In
the event the Corporation, at any time or from time
to time after the Certificate Effective Date,
declares or pays, or makes or fixes a record date for
the determination of holders of Common Stock entitled
to receive, a dividend or other distribution
(including, without limitation, any dividend or
distribution of other or additional stock or other
securities or property by way of dividend or
spin-off, recapitalization or similar corporate
rearrangement), other than a dividend payable in
Additional Shares of Common Stock, then and in each
such event, the Corporation shall pay to the holders
of Preferred Stock, on the date such dividend or
other distribution is paid to the holders of Common
Stock, the securities and other property (including
cash) which they would have received had their
Preferred Stock been converted into Common Stock
immediately prior to the record date fixed in
connection with such event.
7.12 ADJUSTMENT TO CONVERSION PRICE FOR ISSUANCE OR SALE OF
ADDITIONAL SHARES OF COMMON STOCK. If, at any time or from
time to time on or after the Certificate Effective Date, the
Corporation shall issue or sell Additional Shares of Common
Stock for an Effective Price per share less than the
applicable Conversion Price of the Series A Preferred, Series
B Preferred, Series C Preferred or Series D Preferred, as the
case may be, then in effect, then the then applicable
Conversion Pace of the Series A Preferred, Series B Preferred,
Series C Preferred or Series D Preferred, as the case may be,
shall be reduced to an adjusted Conversion Price (computed to
the nearest cent, a half cent being treated as a full cent),
as of the date of such issuance or sale, by dividing (A) the
sum of (X) the result obtained by multiplying the number of
shares of Common Stock outstanding immediately prior to such
issue or sale by the Conversion Price then in effect, and (Y)
the consideration, if any, received by the Corporation upon
such issue and sale, by (B) the number of shares of Common
Stock outstanding immediately after such issue or sale;
PROVIDED, HOWEVER, that, notwithstanding anything herein to
the contrary, from and after the Certificate Effective Date
and until such time as the Corporation has consummated one or
more issuances or sales of Additional Shares of Common Stock
(including, without limitation, any Additional Shares of
Common Stock deemed to be issued pursuant to Section 7.13 with
respect to any issuance or sale of any Convertible Securities
or rights, warrants or options to subscribe for, purchase or
otherwise acquire Additional Shares of Common Stock or
Convertible Securities) that have resulted in the Corporation
receiving aggregate net proceeds equal to at least
$15,000,000, if at any time the Corporation shall issue or
sell any Additional Shares of Common Stock for an Effective
Price per share less than the Series D Conversion Price in
effect on the date of and immediately prior to such issue or
sale, then, the Series D Conversion Price shall be reduced,
concurrently with such issuance or sale, to an adjusted
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Series D Conversion Price equal to the Effective Price per
share for which such Additional Shares of Common Stock were
issued or sold or deemed to have been issued or sold. For
purposes of adjusting the Conversion Price under this Section
7.12, Common Stock outstanding shall include shares of Series
A Preferred, Series B Preferred, Series C Preferred and Series
D Preferred then outstanding (on an as converted basis) but
shall not include any outstanding Convertible Securities or
outstanding rights or options, except as required by the
provisions of Section 7.13.
7.13 FURTHER PROVISIONS FOR ADJUSTMENT OF CONVERSION PRICE. For the
purpose of Section 7.12 above, the following provisions shall
be applicable:
A. ISSUANCE PROVISIONS FOR ADJUSTMENT OF CONVERSION
PRICE. If, at any time after the Certificate
Effective Date, the Corporation shall issue or sell
any Convertible Securities, there shall be determined
as of the date of issuance the Effective Price per
share for which Additional Shares of Common Stock are
issuable upon the conversion or exchange thereof,
such determination to be made by dividing (X) the
total amount received or receivable by the
Corporation as consideration for the issuance or sale
of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or
exchange thereof, by (Y) the maximum number of
Additional Shares of Common Stock issuable upon
conversion or exchange of all of such Convertible
Securities. Such issue or sale shall be deemed, for
purposes of Section 7.12, to be an issuance or sale
for cash (as of the date of issuance or sale of such
Convertible Securities) of such maximum number of
Additional Shares of Common Stock at the price per
share so determined.
If such Convertible Securities shall by their terms
provide for an increase or increases, with the
passage of time, in the amount of additional
consideration, if any, payable to the Corporation, or
in the rate of exchange, upon the conversion or
exchange thereof the adjusted Conversion Price shall,
forthwith upon any such increase becoming effective,
be readjusted to reflect the same.
If any rights of conversion or exchange evidenced by
such Convertible Securities shall expire without
having been exercised, any adjusted Conversion Price
shall forthwith be readjusted to be the adjusted
Conversion Price which would have been in effect had
an adjustment been made on the basis that the only
Additional Shares of Common Stock issued or sold were
those actually issued upon the conversion or exchange
of such Convertible Securities, and that they were
issued or sold for the consideration actually
received by the Corporation upon such conversion or
exchange, plus the consideration, if any, actually
received by the
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Corporation for the issuance or sale of such
Convertible Securities, whether or not actually
converted or exchanged.
B. GRANT OF RIGHTS, WARRANTS OR OPTIONS FOR COMMON
STOCK. If, at any time after the Certificate
Effective Date, the Corporation shall grant any
rights, warrants or options to subscribe for,
purchase or otherwise acquire Additional Shares of
Common Stock, there shall be determined as of the
date of issuance the Effective Price per share for
which Additional Shares of Common Stock are issuable
upon the exercise of such rights, warrants or
options, such determination to be made by dividing
(X) the total amount, if any, received or receivable
by the Corporation as consideration for the granting
of such rights, warrants or options, plus the minimum
aggregate amount of additional consideration payable
to the Corporation upon the exercise of such rights,
warrants or options, by (Y) the maximum number of
Additional Shares of Common Stock of the Corporation
issuable upon the exercise of such rights, warrants
or options. The granting of such rights, warrants or
options shall be deemed, for purposes of Section
7.12, to be an issuance or sale for cash (as of the
date of the granting of such rights, warrants or
options) of such maximum number of Additional Shares
of Common Stock at the price per share so determined.
If such rights, warrants or options shall by their
terms provide for an increase or increases, with the
passage of time, in the amount of additional
consideration payable to the Corporation upon the
exercise thereof, the adjusted Conversion Price
shall, forthwith upon any such increase becoming
effective, be readjusted to reflect the same.
If any such rights, warrants or options shall expire
without having been exercised, any adjusted
Conversion Price shall forthwith be readjusted to be
the adjusted Conversion Price which would have been
in effect had an adjustment been made on the basis
that the only Additional Shares of Common Stock so
issued or sold were those actually issued or sold
upon the exercise of such rights, warrants or options
and that they were issued or sold for the
consideration actually received by the Corporation
upon such exercise, plus the consideration, if any,
actually received by the Corporation for the granting
of all such rights, warrants or options, whether or
not exercised.
C. GRANT OF RIGHTS, WARRANTS OR OPTIONS FOR CONVERTIBLE
SECURITIES. If, at any time after the Certificate
Effective Date, the Corporation shall grant any
rights, warrants or options to subscribe for,
purchase or otherwise acquire Convertible Securities,
there shall be determined as of the date of issuance
the Effective Price per share for which Additional
Shares of Common Stock are issuable upon the exercise
of such rights warrants or options for such
Convertible Securities, such determination to be made
by
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dividing (X) the total amount, if any, received or
receivable by the Corporation as consideration for
the granting of such rights, warrants or options,
plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the
exercise of such rights, warrants or options and the
conversion or exchange of such Convertible
Securities, by (Y) the maximum number of Additional
Shares of Common Stock of the Corporation issuable
upon the exercise of such rights, warrants or options
and the conversion or exchange of all of such
Convertible Securities. The granting of such rights,
warrants or options shall be deemed, for purposes of
Section 7.12, to be an issuance or sale for cash (as
of the date of the granting of such rights, warrants
or options) of such maximum number of Additional
Shares of Common Stock at the price per share so
determined.
If such rights, warrants or options shall by their
terms provide for an increase or increases, with the
passage of time, in the amount of additional
consideration payable by the Corporation upon the
exercise or the conversion or exchange thereof, or in
the rate of exchange of such Convertible Securities,
any adjusted conversion price shall, forthwith upon
any such increase becoming effective, be readjusted
to reflect the same.
If any such rights, warrants or options or any rights
of conversion or exchange shall expire without having
been exercised, the adjusted Conversion Price shall
forthwith be readjusted to be the adjusted Conversion
Price which would have been in effect had an
adjustment been made on the basis that the only
Additional Shares of Common Stock so issued or sold
were those actually issued or sold upon the exercise
of such rights, warrants or options and/or the
conversion or exchange of such Convertible Securities
and that they were issued or sold for the
consideration actually received by the Corporation
upon such exercise, conversion or exchange, plus the
consideration, if any, actually received by the
Corporation for the granting of all such rights,
warrants or options and/or the issuance of such
Convertible Securities, whether or not exercised,
converted or exchanged.
D. DETERMINATION OF CONSIDERATION. Upon any issuance or
sale for a consideration other than cash, or a
consideration part of which is other than cash, of
any Additional Shares of Common Stock or Convertible
Securities or any rights, warrants or options to
subscribe for, purchase or otherwise acquire any
Additional Shares of Common Stock or Convertible
Securities, the amount of the consideration other
than cash received by the Corporation shall be deemed
to be the fair value of such consideration as
determined in good faith by the Board. In case any
Additional Shares of Common Stock or Convertible
Securities or any rights, warrants or options to
subscribe for, purchase or otherwise acquire any
Additional Shares of Common Stock or Convertible
Securities shall be issued or sold
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together with other stock or securities or other
assets of the Corporation for a consideration which
covers two or more thereof, the consideration for the
issue or sale of such Additional Shares of Common
Stock or Convertible Securities or such rights,
warrants or options shall be deemed to be the portion
of such consideration allocated thereto in good faith
by the Board.
E. DURATION OF ADJUSTED CONVERSION PRICE. Following each
computation or readjustment of an adjusted Conversion
Price as provided above in this Section 7, the new
adjusted Conversion Price shall remain in effect
until a further computation or readjustment thereof
is required by this Section 7.
F. OTHER ACTION AFFECTING COMMON STOCK. In case, after
the Certificate Effective Date, the Corporation shall
take any action affecting its shares of Common Stock,
other than an action described above in this Section
7, which in the good faith opinion of the Board would
have a materially adverse effect upon the conversion
rights of the Preferred Stock granted herein, the
Conversion Price shall be adjusted in such manner and
at such time as the Board may in good faith determine
to be equitable in the circumstances.
G. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion
Price pursuant to this Section 7, the Corporation at
its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and
furnish to each holder of Preferred Stock a
certificate setting forth such adjustment or
readjustment and showing in reasonable detail the
facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written
request, at any time, of any holder of Preferred
Stock, furnish or cause to be furnished to such
holder a like certificate setting forth: (i) such
adjustments and readjustments; (ii) the applicable
Conversion Price at the tinge 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 such Preferred Stock.
7.14 NOTICES OF RECORD DATE. In the event of any taking by the
Corporation of a record of the holders of any class of
securities for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous
quarters) or other distribution, any capital reorganization of
the Corporation, any reclassification or recapitalization of
the Corporation's capital stock, any consolidation or merger
with or into another Corporation, any transfer of all or
substantially all of the assets of the Corporation or any
dissolution, liquidation or winding up of the Corporation, the
Corporation shall mail to each holder of Preferred Stock at
least ten (10) days prior to the date specified for the taking
of a record, a notice
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specifying the date on which any such record is to be taken
for the purpose of such action.
7.15 COMMON STOCK RESERVED. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be
sufficient to effect conversion of the Preferred Stock. The
Corporation covenants that all shares of Common Stock which
shall be so issuable shall, upon issuance, be duly authorized,
validly, issued, fully paid and nonassessable, free from
preemptive or similar rights on the part of the holders of any
shares of capital stock or securities of the Corporation or
any other person or entity, and free from all taxes, liens and
charges with respect to the issue thereof (not including any
income taxes payable by the holders of shares of Preferred
Stock being converted in respect of gains thereon). The
Corporation shall use its best efforts to take all such action
as may be necessary to ensure that such shares of Common Stock
may be so issued without violation of any applicable law or
regulation, or of any applicable requirements of the National
Association of Securities Dealers, Inc. and of any domestic
securities exchange upon which the Common Stock may be listed.
7.16 PAYMENT OF TAXES. The Corporation will pay all taxes (other
than taxes based upon income) and other governmental charges
that may be imposed with respect to the issue or delivery of
shares of Common Stock upon conversion of shares of Preferred
Stock, other than any tax or other charge imposed in
connection with any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that
in which the shares of Preferred Stock so converted were
registered.
8. STATUS OF PREFERRED STOCK UPON RETIREMENT. Shares of Preferred Stock
which are acquired or redeemed by the Corporation or converted pursuant
to Section 7 shall be retired pursuant to Delaware General Corporation
Law Section 243, or any successor provision, and returned to the status
of authorized but unissued shares of the Corporation's undesignated
preferred stock.
[****** SIGNATURE PAGE FOLLOWS ******]
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IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Corporation as of June 12, 2000 to be effective as of the
Certificate Effective Date.
ADAYTUM SOFTWARE, INC.
By: /s/ Michael Mehr
--------------------------
Michael Mehr
Vice-President Finance
& Administration
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