EXHIBIT 3.1
SECOND RESTATED CERTIFICATE OF INCORPORATION
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OF
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INFORMAX, INC.
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(Under Section 245 of the
General Corporation Law of the State of Delaware)
INFORMAX, INC. (the "Corporation"), a corporation duly organized and
existing under the General Corporation Law of the State of Delaware (the
"DGCL"), does, by its President, attested to by its Secretary, under its
corporate seal, hereby certify that:
I. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on May 24, 1990. A
Restated Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on June 21, 1999. A
Certificate of the Designations, Powers, Preferences and Rights of the
Series A Preferred Stock of the Corporation was filed with the
Secretary of State of the State of Delaware on June 22, 1999. A
Certificate of Correction of the Corporation was filed with the
Secretary of State of the State of Delaware on June 24, 1999.
II. This Second Restated Certificate of Incorporation amends and restates
the Certificate of Incorporation by deleting from such Certificate of
Incorporation all of the provisions thereof (including, without
limitation, the Certificate of the Designations, Powers and Preferences
of the Series A Preferred Stock) and substituting in lieu of such
provisions the text of the Second Restated Certificate of Incorporation
set forth in Article VIII hereof.
III. Pursuant to Sections 141, 242 and 245 of the DGCL, at a Special Meeting
of the Board of Directors of the Corporation held on August 14, 2000,
the Board of Directors of the Corporation deemed it advisable and in
the best interests of the Corporation to amend and restate in its
entirety the Certificate of Incorporation of the Corporation, as set
forth in this Second Restated Certificate of Incorporation, and
directed that this Second Restated Certificate of Incorporation be
submitted for consideration and action thereon by the Stockholders of
the Corporation.
IV. Pursuant to Sections 228, 242 and 245 of the DGCL, by written consent
in lieu of a Special Meeting of the Holders of Voting Common Stock of
the Corporation dated as of August 15, 2000, the holders of a majority
of the outstanding shares of Voting Common Stock of the Corporation
entitled to vote thereon voted in favor of, approved and adopted this
Second Restated Certificate of Incorporation, including the text set
forth in Article VIII hereof. Prompt notice of the taking of the
aforesaid corporate action without a meeting by less than unanimous
written consent will be given, in accordance with Section 228 of the
DGCL, to the stockholders of the Corporation who have not consented in
writing to such action.
V. Pursuant to Sections 228, 242 and 245 of the DGCL, by unanimous written
consent in lieu of a Special Meeting of the Holders of Preferred Stock
of the Corporation dated as of August 15, 2000, the holder of all of
the outstanding shares of Preferred Stock of the Corporation entitled
to vote thereon voted in favor of, approved and adopted this Second
Restated Certificate of Incorporation, including the text set forth in
Article VIII hereof.
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VI. Pursuant to Sections 228, 242 and 245 of the DGCL, by written consent
in lieu of a Special Meeting of the Holders of Voting Common Stock of
the Corporation and the Holders of Preferred Stock of the Corporation
dated as of August 15, 2000, the holders of a majority of the
outstanding shares of Voting Common Stock and Preferred Stock of the
Corporation entitled to vote thereon voted in favor of, approved and
adopted this Second Restated Certificate of Incorporation, including
the text set forth in Article VIII hereof. Prompt notice of the taking
of the aforesaid corporate action without a meeting by less than
unanimous written consent will be given, in accordance with Section 228
of the DGCL, to the stockholders of the Corporation who have not
consented in writing to such action.
VII. The text of the Second Restated Certificate of Incorporation set forth
in Article VIII hereof was duly adopted by the Board of Directors, by
the holders of a majority of the outstanding shares of Voting Common
Stock of the Corporation, by the holders of a majority of the
outstanding shares of Preferred Stock of the Corporation and by the
holders of a majority of the outstanding shares of Voting Common Stock
and Preferred Stock of the Corporation, each as entitled to vote
thereon in accordance with the provisions of Sections 141, 228, 242 and
245 of the DGCL.
VIII. The text of the Certificate of Incorporation of the Corporation is
hereby restated by this Second Restated Certificate of Incorporation,
to read in full as follows:
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SECOND RESTATED CERTIFICATE OF INCORPORATION
OF
INFORMAX, INC.
FIRST: The name of the Corporation (hereinafter referred to as the
"Corporation") is:
INFORMAX, INC.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, in the City of Wilmington County of New Castle,
Delaware 19801. The name of the Corporation's registered agent at such address
is The Corporation Trust Company.
THIRD: The nature of the business, or objects or purposes to be transacted,
promoted or carried on are to produce or market software, and to engage in any
other lawful activity for which corporations may be organized under the General
Corporation Law of Delaware (the "DGCL").
FOURTH: A. The total number of shares of capital stock that the Corporation has
authority to issue is Nineteen Million Seven Hundred Forty-one Thousand, One
Hundred Sixty-nine (19,741,169) shares, of which One Million Six Hundred
Ninety-seven, Two Hundred Ninety-three (1,697,293) shares, with a par value of
One Cent ($0.01) per share, shall be designated "Voting Common Stock," Fourteen
Million Nine Hundred Thirty One Thousand, Eight Hundred Sixty-four (14,931,864)
shares, with a par value of One Cent ($0.01) per share, shall be designated
"Nonvoting Common Stock," and Three Million One Hundred Twelve Thousand and
Twelve (3,112,012) shares, with a par value of One Cent ($0.01) per share, shall
be designated "Preferred Stock."
B. Preferred Stock. The designations, preferences, privileges and
powers and relative, participating, optional or other special rights and
qualifications, limitations or restrictions of the Preferred Stock shall be as
follows:
1. Number of Shares. The Preferred Stock shall consist of 2,161,265 shares
of Series A Preferred Stock, par value One Cent ($0.01) per share (the "Series A
Stock"), and 950,747 shares of Series B Preferred Stock, par value One Cent
($0.01) per share (the "Series B Stock").
2. Definitions. For purposes of this Article FOURTH, the following
definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall mean the Nonvoting Common Stock and the
Voting Common Stock.
(c) "Common Stock Dividend" shall mean a stock dividend declared
and paid on the Common Stock that is payable in shares of Common Stock.
(d) "Distribution" shall mean the transfer of cash or property by
the Corporation to one or more of its stockholders without consideration,
whether by dividend or otherwise (except a dividend in shares of the
Corporation's stock). A Permitted Repurchase (defined below) is not a
Distribution.
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(e) "Dividend Rate" for the Series A Stock and Series B Stock,
respectively, shall mean eight percent (8%) of the Original Issue Price per
share per annum for the Series A Stock and Series B Stock, respectively.
(f) "Original Issue Date" for the Series A Stock and Series B
Stock, respectively, shall mean the date on which the first share of Series A
Stock or Series B Stock, as the case may be, is issued by the Corporation.
(g) "Original Issue Price" shall mean $1.850768 per share for the
Series A Stock and $10.518042 per share for the Series B Stock.
(h) "Permitted Repurchases" shall mean the repurchase by the
Corporation of shares of Common Stock held by employees, officers, directors,
consultants, independent contractors, advisors, or other persons performing
services for the Corporation or a Subsidiary that are subject to a stockholders
agreement, restricted stock purchase agreements or stock option agreements under
which the Corporation has the option to repurchase such shares: (i) at such
holder's cost, upon the occurrence of certain events, such as the termination of
employment or services; or (ii) at any price pursuant to the Corporation's
exercise of a right of first refusal to repurchase such shares.
(i) "Subsidiary" shall mean any corporation of which at least
fifty percent (50%) of the outstanding voting stock is at the time owned
directly or indirectly by the Corporation or by one or more of such subsidiary
corporations.
3. Dividend Rights.
(a) Dividend Preference. In each calendar year, the holders of the
then outstanding Preferred Stock shall be entitled to receive, when, as and if
declared by the Board, out of any funds and assets of the Corporation legally
available therefor, cumulative dividends at the annual Dividend Rate for the
Series A Stock and the Series B Stock, respectively, prior and in preference to
the payment of any dividends or other Distribution on the Common Stock in such
calendar year (other than a Common Stock Dividend). No dividends (other than a
Common Stock Dividend) shall be paid, and no Distribution shall be made, with
respect to the Common Stock during any calendar year unless dividends in the
total amount of the annual Dividend Rate for the Series A Stock and the Series B
Stock, respectively, shall have first been paid or declared and set apart for
payment to the holders of the Series A Stock and the Series B Stock; provided,
however, that this restriction shall not apply to Permitted Repurchases.
Dividends on each share of the Preferred Stock shall accrue on a daily basis at
the applicable annual Dividend Rate, plus all accumulated and unpaid dividends
thereon, from and including the applicable Original Issue Date of such share of
Series A Stock or Series B Stock, as the case may be, to and including the first
to occur of (i) the date on which the Liquidation Preference set forth in
Section 4 (plus all accrued and unpaid dividends thereon) is paid to the holder
thereof in connection with the liquidation or winding up of the Corporation, or
(ii) the redemption of such share of Series A Stock or Series B Stock, as the
case may be. No accumulation of dividends on the Preferred Stock shall bear any
interest.
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(b) Participation Rights. If, after dividends in the full
preferential amount specified in this Section 3 for the Preferred Stock have
been paid or declared and set apart in any calendar year of the Corporation,
then any additional dividends declared by the Board out of funds legally
available therefor in that calendar year, shall be declared solely on the then
outstanding Common Stock.
(c) Non-Cash Dividends. Whenever a dividend or Distribution
provided for in this Section 3 shall be payable in property other than cash, the
value of such dividend or Distribution shall be deemed to be the fair market
value of such property as determined in good faith by the Board of Directors
(with the consent of the Series A Designee (as defined below), which shall not
be unreasonably withheld), except that the value of any securities to be
distributed to stockholders shall be determined as follows:
(i) if the securities are then traded on a national securities
exchange, the NASDAQ National Market System (or a similar national quotation
system) or the NASDAQ SmallCap Market, then the value shall be deemed to be the
average of the closing prices of the securities on such exchange or system over
the 30-day period ending three (3) days prior to the distribution; and
(ii) if actively traded over-the-counter, then the value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending three (3) days prior to the closing of such merger, consolidation or
sale; and
(iii) if there is no active public market, then the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the Corporation (with the consent of the Series A Designee which
consent shall not be unreasonably withheld).
The method of valuation of securities subject to investment letter or
other restrictions on free marketability shall be to make an appropriate
discount from the market value determined as above in Section 3(c)(i), (ii) or
(iii) to reflect the approximate fair market value thereof, as determined in
good faith by the Board (with the consent of the Series A Designee which consent
shall not be unreasonably withheld).
(d) No Payment on Conversion. If the Corporation shall have
accrued but unpaid dividends with respect to the Preferred Stock upon its
conversion as provided in Section 7, then all such accrued but unpaid dividends
on such converted shares shall be canceled.
4. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the funds and
assets of the Corporation that may be legally distributed to the Corporation's
stockholders (the "Available Funds and Assets") shall be distributed to
stockholders in the following manner:
(a) Liquidation Preferences. The holders of each share of
Preferred Stock then outstanding shall be entitled to be paid, out of the
Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock, an amount per share
equal to the Original Issue Price for the Series A Stock or the Series B Stock,
as the case may be (such price per share to be appropriately adjusted to reflect
Common Stock Events (as defined in Section 7(d)), plus all accrued but unpaid
dividends thereon, whether or not earned or declared, to and including the date
full payment of such amount shall be tendered to the holders of the Series A
Stock or Series B Stock, respectively, with respect to such liquidation,
dissolution or winding up (the "Liquidation Preference"). If upon any
liquidation, dissolution or winding up of the Corporation the Available Funds
and Assets shall be insufficient to permit the payment to holders of the
Preferred Stock of the full Liquidation Preference, then all the remaining
Available Funds and Assets shall be distributed among the holders of the then
outstanding shares of Series A Stock and the Series B Stock pro rata in
proportion to the amount that would be payable to them in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
said shares were paid in full.
(b) Participation Rights. If there are any Available Funds and
Assets remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Preferred Stock of the
Liquidation Preference, then the entire remaining Available Funds and Assets, if
any, shall be distributed solely among the holders of the then outstanding
Common Stock.
(c) Merger or Sale of Assets. A (i) consolidation or merger of the
Corporation with or into any other entity in which the holders of the
Corporation's outstanding shares immediately before such consolidation or merger
do not, immediately after such consolidation or merger, retain stock or other
equity interests representing a majority of the voting power of the surviving
entity of such consolidation or merger; or (ii) sale of all or substantially all
of the assets of the Corporation (any of the foregoing events referred to herein
as a "Sale Transaction"), shall each be deemed to be a liquidation, dissolution
or winding up of the Corporation as those terms are used in this Section 4;
provided, however, that, if such Sale Transaction shall be a Qualifying Sale
Transaction pursuant to Section 8 below, then such Sale Transaction shall not be
deemed a liquidation, dissolution or winding up. Notwithstanding the foregoing,
by vote or written consent of the holders of a majority of the Series A Stock
then outstanding, such holders may (i) waive the right to treat any of the
foregoing events as a deemed liquidation; and (ii) elect to convert such Series
A Stock to Common Stock pursuant to Section 7 below in lieu of a deemed
liquidation pursuant to this Section 4(c) simultaneously with any deemed
liquidation. Furthermore, by vote or written consent of the holders of a
majority of the Series B Stock then outstanding, such holders may (i) waive the
right to treat any of the foregoing events as a deemed liquidation; and (ii)
elect to convert such Series B Stock to Common Stock pursuant to Section 7 below
in lieu of a deemed liquidation pursuant to this Section 4(c) simultaneously
with any deemed liquidation.
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(d) Non-Cash Consideration. If any assets of the Corporation
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Corporation are other than cash, then the value of such assets
shall be their fair market value as determined in good faith by the
Corporation's Board of Directors (with the consent of the Series A Designee,
which shall not be unreasonably withheld), except that any securities to be
distributed to stockholders in a liquidation, dissolution or winding up of the
Corporation shall be valued as follows:
(i) The method of valuation of securities not subject to
investment letter or other similar restrictions on free marketability shall be
as follows:
a. if the securities are then traded on a national
securities exchange, the NASDAQ National Market System (or a similar national
quotation system) or the NASDAQ SmallCap Market, then the value shall be deemed
to be the average of the closing prices of the securities on such exchange or
system over the 30-day period ending three (3) days prior to the distribution;
and
b. if actively traded over-the-counter, then the value
shall be deemed to be the average of the closing bid prices over the 30-day
period ending three (3) days prior to the closing of such merger, consolidation
or sale; and
c. if there is no active public market, then the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the Corporation (with the consent of the Series A Designee).
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in Section
4(d)(i)(a), (b) or (c) to reflect the approximate fair market value thereof, as
determined in good faith by the Board (with the consent of the Series A Designee
which consent shall not be unreasonably withheld).
5. Redemption.
(a) Optional Redemption of Preferred Stock. Subject to the terms
and conditions of this subsection, to the extent that any outstanding shares of
Series A Stock or Series B Stock have not been redeemed or converted into Common
Stock prior to the fifth anniversary of the Original Issue Date of the Series A
Stock, the Corporation shall, upon receiving at any time after the fifth
anniversary of the Original Issue Date of the Series A Stock, a written request
for the redemption of all or part of the Series A Stock or Series B Stock, as
the case may be, under this Section 5 signed by the holders of a majority of the
then outstanding shares of Series A Stock or Series B Stock, as the case may be
(such date upon which the holders of Series A Stock or Series B Stock, as the
case may be, provide notice to the Corporation shall be referred to herein as
the "Redemption Notice Date"), redeem on the date or dates set forth below such
shares of Series A Stock or Series B Stock, as the case may be, as are specified
in such written request from any source of funds legally available therefor at
the redemption price therefor described in this Section 5, until all outstanding
shares of Series A Stock or Series B Stock, as the case may be, have been
redeemed (or converted to Common Stock as provided in Section 7); provided, such
redemption notice specifies a number of shares of Series A Stock or Series B
Stock, as the case may be, equal to at least 20% of the shares of Series A Stock
or Series B Stock, as the case may be, that are outstanding on the Redemption
Notice Date.
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(b) Redemption Price. The redemption price for each share of
Preferred Stock shall be equal to the Liquidation Preference thereof (plus all
accrued and unpaid dividends thereon).
(c) Redemption Payment. In the event of any redemption registered
by a holder of any Preferred Stock pursuant to this Section 5, the Corporation
shall make payment in accordance with the following schedule:
(i) All of the shares of Series A Stock or Series B Stock, as
the case may be, shall be redeemed in cash sixty (60) days following the
Redemption Notice Date, or if the Corporation does not have sufficient funds
legally available to make full payment in cash or such a payment would cause the
Corporation to be in violation of its covenants to any lender, lessor or other
contract party, then:
(ii) Within sixty (60) days following the Redemption Notice
Date, one-third (33-1/3%) of the shares of Series A Stock or Series B Stock, as
the case may be, shall be redeemed in cash, with an additional one-third
(33-1/3%) of the shares of Series A Stock or Series B Stock, as the case may be,
to be redeemed one (1) year after the Redemption Notice Date in cash and the
final one-third (33-1/3%) of the shares of Series A Stock or Series B Stock, as
the case may be, to be redeemed two (2) years after the Redemption Notice Date
in cash, or if the Corporation is unable to make full payment pursuant to this
Section 5(c)(ii), then:
(iii) Within sixty (60) days of the Redemption Notice Date,
all of the shares of Series A Stock or Series B Stock, as the case may be, shall
be redeemed in accordance with a payment schedule, to be mutually agreed to by
the Corporation and a representative of the Series A Stock or Series B Stock, as
the case may be, selected by a majority of the holders of the Series A Stock or
Series B Stock, as the case may be, to be redeemed (the "Preferred Stock
Representative"), which shall provide for the maximum possible payment based on
the Corporation's operating cash flow at such time. If the Preferred Stock
Representative and the Corporation cannot agree on the appropriate percentage of
operating cash flow, then a determination shall be made by an independent third
party mutually acceptable to the Corporation and the Preferred Stock
Representative.
(iv) If (a) the Corporation makes payment on account of a
redemption pursuant to Section 5(c)(ii) or Section 5(c)(iii) above, (b) at any
time during the applicable payment period specified in such sections, there is a
Sale Transaction or Qualifying IPO involving the Corporation and (c) the price
per share that a holder of redeemed shares of Preferred Stock would have
received in such Sale Transaction or Qualifying IPO had such redeemed shares
remained outstanding at the time of such event is higher than the redemption
price per share calculated in accordance with Section 5(b), then the holder of
such redeemed shares of Preferred Stock shall be entitled to receive such higher
price with respect to any shares of Series A Stock or Series B Stock, as the
case may be, that have not been redeemed as of the date of the Closing for such
Sale Transaction or Qualifying IPO.
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(v) Redemption Funds. In case of any partial redemption, the
shares of Preferred Stock to be redeemed shall be selected pro rata such that
there shall be redeemed from each holder surrendering shares for redemption in
whole shares, as nearly as practicable to the nearest share, that number of
shares equal to the product of the number of shares to be redeemed multiplied by
a fraction, the numerator of which is the number of shares held by such holder
divided by the total number of shares surrendered for redemption. Any holder of
shares of Preferred Stock may rescind the redemption with respect to any shares
of Preferred Stock at any time after the Redemption Notice Date up until any
Redemption Closing Date (as defined below).
(vi) Redemption Notice. At least twenty (20) but no more than
sixty (60) days prior to the date fixed for any redemption of any Preferred
Stock (the "Redemption Closing Date"), written notice shall be mailed by the
Corporation, postage prepaid, to each holder of record (at the close of business
on the business day next preceding the day on which notice is given) of the
Preferred Stock to be redeemed, at the address last shown on the records of the
Corporation for such holder or given by the holder to the Corporation for the
purpose of notice or, if no such address appears or is given, at the place where
the principal executive office of the Corporation is located, notifying such
holder of the redemption to be effected, specifying the subsection hereof under
which such redemption is being effected, the Redemption Closing Date, the
applicable redemption price, the number of such holder's shares of Preferred
Stock, as the case may be, to be redeemed, the place at which payment may be
obtained and the date on which such holder's conversion rights (as set forth in
Section 7) as to such shares terminate (which date shall in no event be earlier
than three (3) days prior to the Redemption Closing Date) and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, the certificate or certificates representing the shares to be
redeemed (the "Redemption Notice"); provided, however, only one such Redemption
Notice need be given for a Redemption effected pursuant to Section 5(c)(ii) or
(iii), provided, further, (i) such Redemption Notice identifies all scheduled
redemption dates, and (ii) each new transferee who acquires shares of Preferred
Stock after such shares are first to be redeemed under Section 5(c)(ii) or (iii)
shall be given a similar Redemption Notice before redemption of any such
holder's Preferred Stock, as the case may be, under Section 5(c)(ii) or (iii).
(vii) Surrender of Certificates. On or before each designated
Redemption Closing Date, each holder of Preferred Stock to be redeemed shall
(unless such holder has previously exercised his right to convert such shares of
Preferred Stock into Common Stock as provided in Section 7 below), surrender the
certificate(s) representing such shares of Preferred Stock to be redeemed 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(s) as the owner thereof,
and each surrendered certificate shall be canceled and retired. If less than all
of the shares represented by such certificate are redeemed, then the Corporation
shall promptly issue a new certificate representing the unredeemed shares.
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(viii) Effect of Redemption. If the Redemption Notice shall
have been duly given, and if on the Redemption Closing Date the redemption price
is either paid or made available for payment, then notwithstanding that the
certificates evidencing any of the shares of Preferred Stock so called for
redemption shall not have been surrendered, all dividends with respect to such
shares shall cease to accrue after the Redemption Closing Date, such shares
shall not thereafter be transferred on the Corporation's books and all rights of
the holders of such shares with respect to such shares shall terminate after the
Redemption Closing Date, except only the right of the holders to receive the
redemption price without interest upon surrender of their certificate(s)
therefor.
6. Voting Rights.
(a) Preferred Stock.
(i) Each outstanding share of Series A Stock or Series B Stock
shall be entitled to the number of votes such that the aggregate votes of the
holders of the Series A Stock and the Series B Stock, respectively, is equal to
the economic stake the Series A Stock and the Series B Stock, respectively, have
in the Corporation at the record date for the determination of the stockholders
entitled to vote on such matters or, if no such record date is established, the
date such vote is taken or any written consent of Stockholders is solicited.
(ii) The voting authority for the Series A Stock (the "Series
A Preferred Stock Voting Authority") and the voting authority for the Series B
Stock (the "Series B Preferred Stock Voting Authority") shall be determined by
the Board of Directors (including the consent of Series A Designee which consent
shall not be unreasonably withheld) in a reasonable and consistent manner. By
way of illustration, if holders of the Series A Stock were entitled to vote on a
matter immediately after the Original Issue Date for the Series A Stock, and
prior to the Original Issue Date for the Series B Stock, then a reasonable
calculation of the Series A Preferred Stock Voting Authority would be as
follows:
a. Calculate the total Number of Shares of Common Stock
(Nonvoting and Voting) into which the Series A Stock is convertible by
determining the Conversion Price in accordance with Section 7(c) = 2,161,265.
b. Total Number of Shares of Common Stock (Nonvoting and
Voting) on a fully diluted basis including all shares reserved for issuance
under the Corporation's Equity Incentive Compensation Plan = 14,048,221.
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c. Aggregate Voting Percentage of Series A Stock =
2,161,265 / 14,048,221 = 15.384615%.
d. Aggregate Voting Percentage of Voting Common Stock =
100 - 15.384615 = 84.615385%.
e. Aggregate Total of Voting Shares of Common Stock =
1,350,000.
f. Aggregate Total of Voting Shares (Common Stock and
Series A Stock) = 1,350,000 / 84.615385% = 1,595,455.
g. Aggregate Total of Series A Stock Voting Shares =
1,595,455 - 1,350,000 = 245,455.
h. Series A Preferred Stock Voting Authority = 245,455 x
2,161,165 (Series A Stock) / 2,161,265 (Series A Stock Outstanding) = 245,455.
By further way of illustration, as of the Original Issue Date of the
Series B Stock, the Aggregate Voting Percentage of the Series B Stock will be
six percent (6%).
(b) General. Subject to the foregoing provisions of this Section
6, each holder of Series A Stock and Series B Stock shall have full voting
rights and powers equal to the voting rights and powers of the holders of Voting
Common Stock, and shall be entitled to notice of any stockholders' meeting in
accordance with the bylaws of the Corporation (as in effect at the time in
question) and applicable law, and shall be entitled to vote, together with the
holders of Voting Common Stock, with respect to any question upon which holders
of Voting Common Stock have the right to vote, except as may be otherwise
provided by applicable law. Except as otherwise expressly provided herein or as
required by law, the holders of the Series A Stock, Series B Stock and Common
Stock shall vote together and not as separate classes.
(c) Board Size. The Company shall not alter the authorized number
of directors in its Certificate of Incorporation, Bylaws or otherwise, without
first obtaining the written consent, or affirmative vote at a meeting, of the
holders of at least sixty six and two-thirds percent (66-2/3%) of the then
outstanding shares of the Series A Stock, consenting or voting (as the case may
be) separately as a class.
(d) Board of Directors Election and Removal.
(i) Election. So long as any shares of Series A Stock remain
outstanding, (i) the holders of the Series A Stock, voting as a separate class,
exclusive of all other stockholders, shall be entitled to elect one (1) director
of the Corporation (the "Series A Designee"), (ii) the holders of the Voting
Common Stock, voting as a separate class, exclusive of all other stockholders,
shall be entitled to elect four (4) directors, and (iii) the holders of the
Series A Stock and the Voting Common Stock, voting as a single class, shall be
entitled to elect the remaining director of the Corporation.
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(ii) Quorum. At any meeting held for the purpose of electing
directors, the presence in person or by proxy of the holders of a majority of
the shares of the Series A Stock then outstanding shall constitute a quorum of
the Series A Stock for the election of directors to be elected solely by the
holders of the Series A Stock. The holders of Series A Stock and Voting Common
Stock representing a majority of the voting power of all the then outstanding
shares of Series A Stock and Voting Common Stock shall constitute a quorum for
the election of the director to be elected jointly by the holders of the Series
A Stock and the Voting Common Stock.
(iii) Required Vote. With respect to the election of any
director or directors by the holders of the outstanding shares of a specified
series or class of stock given the right to elect such director or directors
pursuant to Section 6(d)(i) above ("Specified Stock"), that candidate or those
candidates (as applicable) shall be elected who either: (i) in the case of any
such vote conducted at a meeting of the holders of such Specified Stock, receive
the highest number of affirmative votes of the outstanding shares of such
Specified Stock, up to the number of directors to be elected by such Specified
Stock; or (ii) in the case of any such vote taken by written consent without a
meeting, are elected by the unanimous written consent of the holders of shares
of such Specified Stock.
(iv) Vacancy. If there shall be any vacancy in the office of a
director elected by the holders of any Specified Stock pursuant to Section
6(d)(i), then a successor to hold office for the unexpired term of the holders
of such director may be elected by either: (i) the remaining director or
directors (if any) in office that were so elected by the holders of such
Specified Stock, by the affirmative vote of a majority of such directors (or by
the sole remaining director elected by the holders of such Specified Stock if
there be but one), or (ii) the affirmative vote of holders of the shares of such
Specified Stock that are entitled to elect such director under Section 6(d)(i).
(v) Removal. Any director who shall have been elected to the
Board by the holders of any Specified Stock pursuant to Section 6(d)(i) or by
any director or directors elected by holders of any Specified Stock as provided
in Section 6(d)(iv), may be removed during his or her term of office, either
with or without cause, by the affirmative vote of shares representing a majority
of the voting power of all the outstanding shares of such Specified Stock
entitled to vote, given either at a meeting of such stockholders duly called for
that purpose or pursuant to a written consent of such stockholders without a
meeting, and any vacancy created by such removal may be filled only in the
manner provided in Section 6(d)(iv).
(vi) Procedures. Any meeting of the holders of any Specified
Stock, and any action taken by the holders of any Specified Stock by written
consent without a meeting, in order to elect or remove a director under this
Section 6(d), shall be held in accordance with the procedures and provisions of
the Corporation's Bylaws, the DGCL and applicable law regarding stockholder
meetings and stockholder actions by written consent, as such are then in effect
(including, but not limited to, procedures and provisions for determining the
record date for shares entitled to vote).
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(vii) Special Meetings. Notwithstanding anything to the
contrary contained in the Bylaws of the Corporation, (x) any two directors; or
(y) the holders of at least fifty percent (50%) of the Series A Stock then
outstanding, shall be entitled to call a special meeting of the Board of
Directors or stockholders of the Corporation.
7. Conversion Rights. The outstanding shares of Series A Stock and Series B
Stock shall be convertible into Voting Common Stock and Nonvoting Common Stock
as follows:
(a) Optional Conversion.
(i) At the option of the holder thereof, each share of Series
A Stock and Series B Stock shall be convertible, at any time or from time to
time prior to the close of business on the business day before any date fixed
for (i) redemption of such share pursuant to Section 5 or (ii) automatic
conversion of such share pursuant to Section 7(b), into:
a. Fully paid and nonassessable shares of Nonvoting Common
Stock such that in the aggregate, the total of the Voting Common Stock issuable
pursuant to the conversion of all shares of Series A Stock or Series B Stock, as
the case may be, under subsection (b) below and the aggregate total of Nonvoting
Common Stock issuable upon conversion of all shares of Series A Stock or Series
B Stock, as the case may be, shall be equal to the economic stake such shares of
Series A Stock or Series B Stock, as the case may be, represent at the time of
the conversion; and
b. Fully paid and nonassessable shares of Voting Common
Stock, such that in the aggregate, the total of Voting Common Stock issuable
pursuant to the conversion of all shares of Series A Stock or Series B Stock, as
the case may be, shall be equal to the economic stake such shares of Series A
Stock or Series B Stock, as the case may be, shall represent at the time of the
conversion.
c. The Board of Directors (including the consent of the
Series A Designee which consent shall not be unreasonably withheld) shall
determine the number of shares of Voting Common Stock and Nonvoting Common Stock
issuable upon conversion of each share of Series A Stock and Series B Stock in a
reasonable manner. By way of illustration, if the holder of the Series A Stock
converted the Series A Stock on the date immediately after the Original Issue
Date for the Series A Stock, and before the Original Issue Date for the Series B
Stock, then a reasonable calculation of the Nonvoting Common Stock and Voting
Common Stock issuable to such holder would be as follows:
(1) Series A Preferred Voting Factor = 2,161,265 (Total Number of
Shares to be Converted) / 2,161,265 (Total Number of Series A
Stock Outstanding as determined by using the Conversion Price in
accordance with Section 7(c)).
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(2) 245,455 (the Series A Preferred Stock Voting Authority as
calculated pursuant to Section 6(a)) x 1 (the Series A Preferred
Voting Factor) = 245,455 shares of Voting Common Stock issuable.
(3) 11,886,956 (Total Common Stock (Voting and Nonvoting) on a
fully diluted basis including 500,000 shares reserved for issuance
pursuant to Equity Incentive Compensation Plan) / 84.615385%
(economic stake of such shares) = 14,048,221.
(4) 14,048,221 - (11,886,956 + 245,455) = 1,915,810 shares of
Nonvoting Common Stock issuable.
(5) 2,161,265 (Total Voting Common Stock + Nonvoting Common Stock
issuable) / 14,048,221 = 15.384615%.
(ii) Each holder of Series A Stock or Series B Stock who
elects to convert the same into shares of Common Stock shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or any transfer agent for the Series A Stock, Series B Stock or
Common Stock, and shall give written notice to the Corporation at such office
that such holder elects to convert the same and shall state therein the number
of shares of Series A Stock or Series B Stock being converted. Thereupon, the
Corporation shall promptly issue and deliver at such office to such holder a
certificate or certificates for the number of shares of Voting Common Stock and
Nonvoting Common Stock to which such holder is entitled upon such conversion.
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 Series A Stock or Series B Stock, as the case may be,
to be converted, and the person entitled to receive the shares of Voting Common
Stock and Nonvoting Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder of such shares on such date. All dividends
will cease to accrue upon conversion pursuant to this Section 7(a).
(iii) Each share of Nonvoting Common Stock which was converted
from shares of the Corporation's Series A Stock or Series B Stock shall have the
right, at the election of the holder thereof, to have such share of Nonvoting
Common Stock converted into fully paid and non-assessable shares of Voting
Common Stock if the Corporation elects to convert any other shares of Nonvoting
Common Stock into shares of Voting Common Stock, on the same terms and
conditions as are applicable to such conversion of other shares of Nonvoting
Common Stock.
(b) Automatic Conversion.
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(i) Each share of Series A Stock and Series B Stock shall
automatically be converted into fully paid and nonassessable shares of Common
Stock, as provided herein, (x) immediately prior to the closing of a firm
commitment underwritten public offering pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended, covering the offer
and sale of Common Stock for the account of the Corporation in which the
aggregate net proceeds of such public offering (after deduction of underwriters'
discounts and commissions) equals or exceeds $15,000,000 and in which the public
offering price per share equals or exceeds $5.55 per share (such price per share
of Common Stock to be appropriately adjusted to reflect Common Stock Events (as
defined in Section 7(d)) (a "Qualifying IPO"); it being understood, that such
conversion shall occur simultaneously with the closing of such offering and not
at any time prior thereto including the time of effectiveness of such
registration statement; or (y) with the consent of the holders of 51% or more of
the issued and outstanding shares of Series A Stock and Series B Stock, voting
as separate classes.
(ii) Upon the occurrence of any event specified in Section
7(b)(i) above, the outstanding shares of Series A Stock and Series B Stock shall
be converted into Common Stock automatically without the need for any further
action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent; provided, however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion
unless the certificates evidencing such shares of Series A Stock or Series B
Stock are either delivered to the Corporation or its transfer agent as provided
below, or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. Upon the occurrence of such
automatic conversion of the Series A Stock and Series B Stock, the holders
thereof shall surrender the certificates representing such shares at the office
of the Corporation or any transfer agent for the Series A Stock, Series B Stock
or Common Stock. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Preferred Stock surrendered were
convertible on the date on which such automatic conversion occurred. All
dividends will cease to accrue upon conversion pursuant to this Section 7(b).
(c) Conversion Price. Each share of Preferred Stock shall be
convertible in accordance with Section 7(a) or Section 7(b) above into the
number of shares of Common Stock which results from dividing the applicable
Original Issue Price by the applicable conversion price that is in effect at the
time of conversion (the "Conversion Price"). The initial Conversion Price for
the Series A Stock shall be the Original Issue Price for the Series A Stock; and
the initial Conversion Price for the Series B Stock shall be the Original Issue
Price for the Series B Stock. The Conversion Price shall be subject to
adjustment from time to time as provided below.
(d) Adjustment Upon Common Stock Event. Upon the happening of a
Common Stock Event (as hereinafter defined), the applicable Conversion Price of
the Series A Stock and Series B Stock shall, simultaneously with the happening
of such Common Stock Event, be adjusted by multiplying the applicable Conversion
Price of the Series A Stock and Series B Stock in effect immediately prior to
such Common Stock Event by a fraction, (i) the numerator of which shall be the
number of shares of Common Stock issued and outstanding immediately prior to
such Common Stock Event, and (ii) the denominator of which shall be the number
of shares of Common Stock issued and outstanding immediately after such Common
Stock Event, and the product so obtained shall thereafter be the Conversion
Price for the Series A Stock and Series B Stock, respectively. The Conversion
Price shall be readjusted in the same manner upon the happening of each
subsequent Common Stock Event. As used herein, the term "Common Stock Event"
shall mean (i) the issue by the Corporation of additional shares of Common Stock
as a dividend or other distribution on outstanding Common Stock, (ii) a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock, or (iii) a combination of the outstanding shares of
Common Stock into a smaller number of shares of Common Stock.
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(e) Adjustments for Other Dividends and Distributions. If at any
time or from time to time after the Original Issue Date for the Series A Stock
or the Series B Stock, the Corporation pays a dividend or makes another
distribution to the holders of the Common Stock payable in securities of the
Corporation other than shares of Common Stock, then in each such event provision
shall be made so that the holders of the Series A Stock and Series B Stock shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable upon conversion thereof, the amount of securities of the
Corporation which they would have received had their Series A Stock or Series B
Stock, as the case may be, been converted into Common Stock on the date of such
event (or such record date, as applicable) and had they thereafter, during the
period from the date of such event (or such record date, as applicable) to and
including the conversion date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for during
such period under this Section 7 with respect to the rights of the holders of
the Series A Stock or Series B Stock, or with respect to such other securities
by their terms.
(f) Adjustment for Reclassification. Exchange and Substitution. If
at any time or from time to time after the Original Issue Date for the Series A
Stock or the Series B Stock, the Common Stock issuable upon the conversion of
the Series A Stock or Series B Stock is changed into the same or a different
number of shares of any class or classes of stock, whether by recapitalization,
reclassification, substitution or otherwise (other than by a Common Stock Event
or a stock dividend, reorganization, merger, consolidation or sale of assets
provided for elsewhere in this Section 7), then in any such event each holder of
Series A Stock or Series B Stock shall have the right thereafter to convert such
stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of Series
A Stock or Series B Stock could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.
(g) Sale of Shares Below Conversion Price.
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(i) Adjustment Formula. If at any time or from time to time after
the Original Issue Date for the Series A Stock or the Series B Stock, the
Corporation issues or sells, or is deemed by the provisions of this Section 7(g)
to have issued or sold, Additional Shares of Common Stock (as hereinafter
defined), otherwise than in connection with a Common Stock Event as provided in
Section 7(f), a dividend or distribution as provided in Section 7(e) or a
recapitalization, reclassification, substitution or other change as provided in
Section 7(d), for an Effective Price (as hereinafter defined) per share that is
less than the Conversion Price for the Series A Stock or Series B Stock in
effect immediately prior to such issue or sale, then, and in each such case, the
then-current Conversion Price for the Series A Stock or Series B Stock, as the
case may be, which is more than such amount, shall be reduced, as of the close
of business on the date of such issue or sale, to the price obtained by
multiplying the applicable Conversion Price by a fraction:
a. The numerator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding (as hereinafter defined)
immediately prior to such issue or sale of Additional Shares of Common Stock
plus (B) the quotient obtained by dividing the Aggregate Consideration Received
(as hereinafter defined) by the Corporation for the total number of Additional
Shares of Common Stock so issued or sold (or deemed so issued and sold) by the
Conversion Price for the Series A Stock, or Series B Stock, as applicable, in
effect immediately prior to such issue or sale; and
b. The denominator of which shall be the sum of (A) the
number of Common Stock Equivalents Outstanding immediately prior to such issue
or sale plus (B) the number of Additional Shares of Common Stock so issued or
sold (or deemed so issued and sold).
(ii) Certain Definitions. For the purpose of making any
adjustment required under this Section 7(g):
a. "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation, whether or not subsequently
reacquired or retired by the Corporation, other than: (A) shares of Common Stock
issued or issuable upon conversion of Series A Stock or Series B Stock; (B)
shares of Common Stock issued pursuant to a Qualifying Sale Transaction; (C)
shares of Common Stock issued upon any acquisition, joint venture or strategic
alliance approved by the Series A Designee; (D) shares of Common Stock issued to
equipment lessors, banks or other institutional credit financing sources
approved by the Series A Designee and (E) up to 500,000 shares of Common Stock
(or options, warrants or rights therefor) issued to employees, officers, or
directors of, or contractors, consultants or advisers to, the Corporation
pursuant to stock purchase or stock option plans, stock bonuses or awards,
warrants, contracts or other arrangements that are approved by the Board of
Directors (or the Equity Incentive Compensation Plan Committee thereof), plus
such additional shares of Common Stock (or options, warrants or rights thereof)
issued to employees, officers, or directors of, or contractors, consultants or
advisers to, the Corporation pursuant to stock purchase or stock option plans,
stock bonuses or awards, warrants, contracts or other arrangements that are
approved by the Board of Directors (including the Series A Designee) (in each
case, such number of shares to be calculated net of any repurchases of such
shares by the Corporation and net of any such expired or terminated options,
warrants or rights and to be proportionally adjusted to reflect any subsequent
Common Stock Event);
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b. The "Aggregate Consideration Received" by the
Corporation for any issue or sale (or deemed issue or sale) of securities shall
(A) to the extent it consists of cash, be computed at the gross amount of cash
received by the Corporation before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Corporation in
connection with such issue or sale and without deduction of any expenses payable
by the Corporation; (B) to the extent it consists of property other than cash,
be computed at the fair value of that property as determined in good faith by
the Board (with the consent of the Series A Designee, which shall not be
unreasonably withheld); and (C) if Additional Shares of Common Stock,
Convertible Securities or Rights or Options to purchase either Additional Shares
of Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Corporation for a consideration which
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or Rights or Options.
c. "Common Stock Equivalents Outstanding" shall mean the
number of shares of Common Stock that is equal to the sum of (A) all shares of
Common Stock that are outstanding at the time in question, plus (B) all shares
of Common Stock issuable upon conversion of all shares of Series A Stock, Series
B Stock or other Convertible Securities that are outstanding at the time in
question, plus (C) all shares of Common Stock that are issuable upon the
exercise of Rights or Options that are outstanding at the time in question
assuming the full conversion or exchange into Common Stock of all such Rights or
Options that are Rights or Options to purchase or acquire Convertible Securities
into or for Common Stock.
d. "Convertible Securities" shall mean stock or other
securities convertible into or exchangeable for shares of Common Stock.
e. The "Effective Price" of Additional Shares of Common
Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold, by the Corporation under this Section 7(g), into the Aggregate
Consideration Received, or deemed to have been received, by the Corporation
under this Section 7(g), for the issue of such Additional Shares of Common
Stock; and
f. "Rights or Options" shall mean warrants, options or
other rights to purchase or acquire shares of Common Stock or Convertible
Securities.
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(iii) Deemed Issuances. For the purpose of making any
adjustment to the applicable Conversion Price of the Series A Stock or Series B
Stock, as the case may be, required under this Section 7(g), if the Corporation
issues or sells any Rights or Options or Convertible Securities and if the
Effective Price of the shares of Common Stock issuable upon exercise of such
Rights or Options and/or the conversion or exchange of Convertible Securities
(computed without reference to any additional or similar protective or
antidilution clauses) is less than the Conversion Price then in effect for a
series of Preferred Stock, then the Corporation shall be deemed to have issued,
at the time of the issuance of such Rights, Options or Convertible Securities,
that number of Additional Shares of Common Stock that is equal to the maximum
number of shares of Common Stock issuable upon exercise or conversion of such
Rights, Options or Convertible Securities upon their issuance and to have
received, as the Aggregate Consideration Received for the issuance of such
shares, an amount equal to the total amount of the consideration, if any,
received by the Corporation for the issuance of such Rights or Options or
Convertible Securities, plus, in the case of such Rights or Options, the minimum
amounts of consideration, if any, payable to the Corporation upon the exercise
in full of such Rights or Options, plus, in the case of Convertible Securities,
the minimum amounts of consideration, if any, payable to the Corporation (other
than by cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion or exchange thereof; provided that
a. if the minimum amounts of such consideration cannot be
ascertained, but are a function of antidilution or similar protective clauses,
then the Corporation shall be deemed to have received the minimum amounts of
consideration without reference to such clauses;
b. if the minimum amount of consideration payable to the
Corporation upon the exercise of Rights or Options or the conversion or exchange
of Convertible Securities is reduced over time or upon the occurrence or
non-occurrence of specified events other than by reason of antidilution or
similar protective adjustments, then the Effective Price shall be recalculated
using the figure to which such minimum amount of consideration is reduced; and
c. if the minimum amount of consideration payable to the
Corporation upon the exercise of such Rights or Options or the conversion or
exchange of Convertible Securities is subsequently increased, then the Effective
Price shall again be recalculated using the increased minimum amount of
consideration payable to the Corporation upon the exercise of such Rights or
Options or the conversion or exchange of such Convertible Securities.
No further adjustment of the applicable Conversion Price for the Series
A Stock or Series B Stock, as the case may be, adjusted upon the issuance of
such Rights or Options or Convertible Securities, shall be made as a result of
the actual issuance of shares of Common Stock on the exercise of any such Rights
or Options or the conversion or exchange of any such Convertible Securities. If
any such Rights or Options or the conversion rights represented by any such
Convertible Securities shall expire without having been fully exercised, then
the applicable Conversion Price for the Series A Stock or Series B Stock as
adjusted upon the issuance of such Rights or Options or Convertible Securities
shall be readjusted to the Conversion Price which would have been in effect had
an adjustment been made on the basis that the only shares of Common Stock so
issued were the shares of Common Stock, if any, that were actually issued or
sold on the exercise of such Rights or Options or rights of conversion or
exchange of such Convertible Securities, and such shares of Common Stock, if
any, 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 or Options,
whether or not exercised, plus the consideration received for issuing or selling
all such Convertible Securities actually converted or exchanged, plus the
consideration, if any, actually received by the Corporation (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities,
provided that such readjustment shall not apply to prior conversions of Series A
Stock or Series B Stock.
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(h) Certificate of Adjustment. In each case of an adjustment or
readjustment of the applicable Conversion Price for the Series A Stock or Series
B Stock, the Corporation, at its expense, shall cause its Chief Financial
Officer to compute such adjustment or readjustment in accordance with the
provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to each registered holder of the Series A Stock or Series B Stock, as
the case may be, at the holder's address as shown in the Corporation's books.
(i) Fractional Shares. No fractional shares of Common Stock shall
be issued upon any conversion of Series A Stock or Series B Stock. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the Common Stock's fair market value as determined in good faith
by the Board (with the consent of at least one Series A Designee) as of the date
of conversion.
(j) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Stock and Series B Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Series A Stock and Series B Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of Series A Stock and Series B Stock, the Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of this Section
7 to be given to the holders of shares of Series A Stock or Series B Stock shall
be deemed given upon the earlier of actual receipt or deposit in the United
States mail, by certified or registered mail, return receipt requested, postage
prepaid, addressed to each holder of record at the address of such holder
appearing on the books of the Corporation.
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(l) No Impairment. The Corporation shall not avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but shall at all times in good faith
assist in carrying out all such action as may be reasonably necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Stock and Series B Stock against impairment.
8. Restrictions and Limitations.
(a) Series Protective Provisions. So long as any shares of Series
A Stock remain outstanding (such number of shares being subject to proportional
adjustment to reflect any combination or subdivision of such Series A Stock or
dividends declared in shares of such stock), the Corporation shall not, without
the approval, by vote or written consent, of the holders of at least sixty six
and two-thirds percent (66-2/3%) of the then outstanding shares of Series A
Stock:
(i) alter or change the rights, powers, preferences, or the
restrictions provided for the benefit of, the Series A Stock;
(ii) increase the authorized number of shares of Series A
Stock;
(iii) increase the authorized number of shares of any other
class of Preferred Stock or increase in the authorized number of shares of
Common Stock in an amount exceeding 15% of the number of authorized shares of
Common Stock on a fully-diluted basis at the Original Issue Date for the Series
A Stock;
(iv) create or issue any new class or series of stock with
rights equal to or superior to the rights of the Series A Preferred Stock;
(v) undertake any Sale Transaction (other than a Qualifying
Sale Transaction as defined below);
(vi) declare or pay any dividends on Common Stock or
repurchase or acquire any shares of its capital stock, other than Permitted
Repurchases or pursuant to the "Redemption" provisions in Section 5;
(vii) amend any of its charter documents or bylaws; or
(viii) incur indebtedness in excess of $2,000,000 in the
aggregate at any time.
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Notwithstanding anything to the contrary set forth in this Section 8,
no special super majority consent pursuant to this Section 8 shall be required
of the holders of Series A Stock in the case of a Qualifying Sale Transaction
(as defined below). For purposes of this Section 8, a "Qualifying Sale
Transaction" shall mean a Sale Transaction in which the price per share actually
paid to the holders of Series A Stock equals or exceeds (a) three (3) times the
Original Issue Price for the Series A Stock, if such Sale Transaction is
consummated within 12 months of the Original Issue Date for the Series A Stock
(the "First Stage"); or (b) five (5) times the Original Issue Price for the
Series A Stock, if such Sale Transaction is consummated at any time after the
First Stage. For purposes of determining the consideration received by the
holders of Series A Stock in any Qualifying Sale Transaction, any securities
received by the holders of Series A Stock shall be valued (a) if neither party
to the transaction has a class of publicly traded securities, then at the most
recent valuation of any class of securities of either party to the transaction
(the "Valuation Party") exchanged as a part of such transaction at the
applicable exchange ratio, as such valuation may be adjusted by any reasonably
agreed upon adjustments between the Corporation and the holders of Series A
Stock to reflect material changes to the operations of the Valuation Party after
the date of such valuation, or (b) if one party to the transaction has a class
of publicly traded securities, then the value shall be the fair market value of
the public company's securities exchanged in the transaction at the applicable
exchange ratio. The fair market value of such securities shall be determined as
follows:
(i) if the securities are then traded on a national securities
exchange, the NASDAQ National Market System (or a similar national quotation
system) or the NASDAQ SmallCap Market, then the value shall be deemed to be the
average of the closing prices of the securities on such exchange or system over
the 30-day period ending three (3) days prior to the distribution; and
(ii) if actively traded over-the-counter, then the value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending three (3) days prior to the closing of such merger, consolidation or
sale; and
(iii) if there is no active public market, then the value
shall be the fair market value thereof, as determined in good faith by the Board
of Directors of the Corporation (with the consent of the Series A Designee).
The method of valuation of securities subject to investment letter or
other restrictions on free marketability shall be to make an appropriate
discount from the market value determined as above in Section 4(d)(i)(a), (b) or
(c) to reflect the approximate fair market value thereof, as determined in good
faith by the Board (with the consent of the Series A Designee).
The value of any other consideration received by the holders of Series
A Preferred Stock shall be valued at its fair market value as of the
consummation of such transaction.
9. Adjustments for Stock Splits, Etc. Wherever in this Certificate there is
a reference to a specific number of shares of Common Stock, Series A Stock or
Series B Stock of the Corporation, then, upon the occurrence of any subdivision,
combination or stock dividend of such class or series of stock, the specific
number of shares so referenced in this Certificate shall automatically be
proportionally adjusted to reflect the effect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
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10. Miscellaneous.
(a) No Reissuance of Preferred Stock. No share or shares of
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
(b) Consent to Certain Transactions. Each holder of shares of
Preferred Stock shall, by virtue of its acceptance of a stock certificate
evidencing Preferred Stock, be deemed to have consented to all Permitted
Repurchases.
C. Common Stock. All preferences, voting powers, relative,
participating, optional or other special rights and privileges, and
qualifications, limitations, or restrictions of the Voting Common Stock and
Nonvoting Common Stock are expressly made subject and subordinate to those that
may be fixed with respect to any shares of the Preferred Stock. Except as may be
otherwise required by law or by this Certificate of Incorporation, each holder
of Voting Common Stock shall have one vote in respect of each share of Voting
Common Stock held by him on all matters voted upon by the stockholders. With the
exception of the lack of voting rights, the Nonvoting Common Stock shall have
all rights and interests of the Voting Common Stock.
D. General. No holder of shares of the Corporation of any class,
now or hereafter authorized, shall have any preemptive rights to subscribe for
or purchase any additional, unissued or treasury shares of capital stock or
other securities of the Corporation.
FIFTH: The business of the Corporation shall be managed by a Board of Directors.
Except as otherwise provided in Article FOURTH, the Board of Directors shall
have the power, unless and to the extent that the Board may from time to time by
resolution relinquish or modify the power, without the assent or vote of the
stockholders, to make, alter, amend, change, add to, or repeal the bylaws of the
Corporation.
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Elections of directors need not be by ballot unless the bylaws of the
Corporation shall so provide.
EIGHTH: Except as otherwise provided in Article FOURTH, the Corporation reserves
the right to amend, alter, change or repeal any provision contained in this
certificate of incorporation, in the manner now or hereafter prescribed by
statute.
NINTH: No director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that this Article NINTH shall not eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Title 8 of the Delaware Code (the DGCL); or (iv) for any
transaction from which the director derived an improper personal benefit. In the
event that the DGCL or any successor thereto is amended with respect to the
permissible limits of directors' liability, this Article NINTH shall be deemed
to provide the fullest limitation on liability permitted under such amended
statute. Any repeal or modification of this Article NINTH by the stockholders of
the Corporation only shall be applied prospectively, to the extent that such
repeal or modification would, if applied retrospectively, adversely affect any
limitation on the personal liability of a director of the Corporation existing
immediately prior to such repeal or modification.
[Execution Page Follows]
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Second Restated
Certificate of Incorporation to be signed and executed in its corporate name by
its President, and attested to by its Secretary, who declare, affirm,
acknowledge and certify under the penalties of perjury, that this is their free
act and deed and that the facts stated herein are true and its corporate seal to
be hereunto affixed, as of the 16th day of August, 2000.
ATTEST: INFORMAX, INC.
By:/S/ Alexander Titomirov
---------------------------
Alexander Titomirov
Chief Executive Officer
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<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
INFORMAX, INC.
InforMax, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), hereby certifies as follows:
FIRST: The Board of Directors of the Corporation, at a Special
Meeting held on September 8, 2000, duly adopted resolutions proposing and
declaring advisable each of the amendments to the Certificate of Incorporation,
as amended, of the Corporation as set forth below.
SECOND: Article FOURTH of the Certificate of Incorporation, as
amended, of the Corporation is hereby amended to reclassify all of the
Corporation's authorized, issued and outstanding shares of Nonvoting Common
Stock into Voting Common Stock and that such resulting class of stock shall
thereupon be renamed "Common Stock" by adding the following:
Upon the effective date of this Certificate of
Amendment (the "Effective Time"), each share of Nonvoting
Common Stock of the Corporation, authorized, issued and
outstanding immediately before the Effective Time (the
"Nonvoting Common Stock"), shall immediately following the
Effective Time be changed and reclassified into one share of
Voting Common Stock, and such resulting class of Voting Common
Stock shall thereupon be renamed "Common Stock" (the "Common
Stock") (such change and reclassification being referred to
herein as the "Reclassification"). Immediately following the
Effective Time, each holder of record of a certificate that
immediately prior to the Effective Time represented
outstanding shares of Nonvoting Common Stock (the "Nonvoting
Certificate") shall be entitled to receive, as soon as
reasonably practicable following the surrender by such holder
of such Nonvoting Certificate, a new certificate representing
that number of whole shares of Common Stock into which the
shares of Nonvoting Common Stock so surrendered have been
changed and reclassified as of the Effective Time pursuant to
the Reclassification, and until the Nonvoting Certificates are
surrendered, the Nonvoting Certificates shall be deemed, for
all corporate purposes, to evidence ownership of that number
of whole shares of Common Stock into which the shares of
Nonvoting Common Stock have been changed and reclassified
pursuant to the Reclassification.
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<PAGE>
THIRD: Article FOURTH of the Certificate of Incorporation, as
amended, of the Corporation hereby is amended to effect a 1.67 for 1 stock split
of the Corporation's issued and outstanding shares of Common Stock and to reduce
the par value of the Corporation's Common Stock from $.01 per share to $.001 per
share, by adding the following:
Upon the Effective Time of this Certificate of
Amendment, each share of Common Stock of the Corporation,
having a par value of $.01 per share, outstanding immediately
before the Effective Time (the "Old Common Stock"), shall
immediately following the Effective Time be changed,
reclassified and split into 1.67 shares of Common Stock,
having a par value of $.001 per share (the "New Common Stock")
(such change, reclassification and subdivision being referred
to herein as the "Stock Split"). Immediately following the
Effective Time, each holder of record of a certificate that
immediately prior to the Effective Time represented
outstanding shares of Old Common Stock (the "Old Certificate")
shall be entitled to receive, as soon as reasonably
practicable following the surrender by such holder of such Old
Certificate, a new certificate representing that number of
whole shares of New Common Stock into which the shares of Old
Common Stock so surrendered have been changed, reclassified
and subdivided as of the Effective Time pursuant to the Stock
Split (one share of Old Common Stock changed into 1.67 shares
of New Common Stock), and until the Old Certificates are
surrendered, the Old Certificates shall be deemed, for all
corporate purposes, to evidence ownership of that number of
whole shares of New Common Stock into which the shares of Old
Common Stock have been changed, reclassified and subdivided
pursuant to the Stock Split.
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<PAGE>
FOURTH: Article FOURTH of the Certificate of Incorporation, as
amended, of the Corporation hereby is amended by deleting paragraph A in its
entirety and replacing therewith the following:
A. The total number of shares of capital stock that the
Corporation has authority to issue is One Hundred Twenty
Million (120,000,000) shares, of which One Hundred Million
(100,000,000) shares, with a par value of $.001 per share,
shall be designated "Common Stock," and Twenty Million
(20,000,000) shares, with a par value of $.01 per share, shall
be designated "Preferred Stock."
FIFTH: Pursuant to Sections 228 and 242 of the DGCL, by written
consent in lieu of a Special Meeting dated as of September 8, 2000, the holders
of a majority of the outstanding shares of Common Stock of the Corporation
entitled to vote thereon voted in favor of, approved and adopted the amendments
to the Corporation's Certificate of Incorporation above. Pursuant to Sections
228 and 242 of the DGCL, by unanimous written consent in lieu of a Special
Meeting dated as of September 8, 2000, the holders of all of the outstanding
shares of Preferred Stock of the Corporation entitled to vote thereon voted in
favor of, approved and adopted the amendments to the Corporation's Certificate
of Incorporation above. Pursuant to Sections 228 and 242 of the DGCL, by written
consent in lieu of a Special Meeting dated as of September 8, 2000, the holders
of a majority of the outstanding shares of Common Stock and Preferred Stock of
the Corporation entitled to vote thereon voted in favor of, approved and adopted
the amendments to the Corporation's Certificate of Incorporation above. Prompt
notice of the taking of the aforesaid corporate action without a meeting by less
than unanimous written consent will be given, in accordance with Section 228 of
the DGCL, to the stockholders of the Corporation who have not consented in
writing to such action.
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<PAGE>
IN WITNESS WHEREOF, InforMax, Inc. has caused this Certificate of
Amendment to be signed by its duly authorized officer, as of the 8th day of
September, 2000.
INFORMAX, INC.
By:/S/ Alexander Titomirov
---------------------------
Alexander Titomirov
Chairman of the Board and
Chief Executive Officer
29
