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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MINDARROW SYSTEMS, INC.
The undersigned, Robert I. Webber and Quynh Trinh, hereby certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of MindArrow Systems, Inc., a Delaware corporation.
2. The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on or about March 31, 2000.
3. The Certificate of Incorporation of this corporation shall be amended
and restated to read in full as follows:
ARTICLE I
The name of the corporation is MindArrow Systems, Inc. (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is Corporation Service Company, 1013 Centre Road, in the City of Wilmington,
County of New Castle 19805. The name of its registered agent at such address is
Corporation Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
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ARTICLE IV
The Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock". The total
number of shares that this Corporation is authorized to issue is Forty Million
(40,000,000). The number of shares of Common Stock authorized to be issued is
Thirty Million (30,000,000), par value $.001 per share. The number of shares of
Preferred Stock authorized to be issued is Ten Million (10,000,000), par value
$.001 per share. The Preferred Stock authorized by this Certificate of
Incorporation may be issued from time to time in one or more series. The Board
of Directors of the Corporation is hereby authorized to increase or decrease
(but not below the number of shares of such series then outstanding) the number
of shares of any series of Preferred Stock subsequent to the issue of shares of
such series. The Board of Directors is hereby further authorized to fix, or
alter all or any of, the dividend rights, dividend rate, conversion rights,
voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Preferred Stock, and to fix the number of shares
constituting any such series and the designations of such series. The term
"fixed for such series" and correlative terms as used in this Article IV shall
mean, with respect to any series of Preferred Stock, as stated in a resolution
or resolutions lawfully adopted by the Board of Directors in exercise of such
authority hereinabove granted.
SERIES A PREFERRED STOCK
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No shares of the Corporation's authorized Preferred Stock shall be
designated as Series A Preferred Stock.
SERIES B PREFERRED STOCK
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1. SERIES B Designations and Amounts. One Million Seven Hundred Fifty
Thousand (1,750,000) shares of the Corporation's authorized Preferred Stock are
designated as Series B Preferred Stock.
2. Definitions. For the purposes of this Resolution the following
definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall refer to the Corporation's common stock with
a par value of $.001 per share.
(c) "Purchase Price" shall be $8.00.
(d) "Subsidiary" shall mean any corporation at least 51% of whose
outstanding voting stock shall at the time be owned directly or indirectly by
the Corporation or by one or more subsidiaries of the Corporation.
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3. Dividends. The holder of each issued and outstanding share of Series B
Preferred Stock shall be entitled to receive dividends when and if declared by
the Board, out of funds legally available for such purpose. No dividends (other
than those payable solely in shares of Common Stock) may be declared or paid
with respect to shares of Common Stock during any fiscal year of the Corporation
until dividends in the aggregate amount of not less than $0.90 per share (the
"Dividend Preference Rate") of Series B Preferred Stock (as adjusted as provided
herein) have been paid or declared and set aside with respect to the Series B
Preferred Stock during such fiscal year. If the Corporation shall (a) pay a
distribution in shares of Series B Preferred Stock, (b) subdivide its
outstanding shares of Series B Preferred Stock into a greater number of shares,
(c) combine its outstanding shares of Series B Preferred Stock into a smaller
number of shares, or (d) issue by reclassification of its shares of Series B
Preferred Stock any shares of Series B Preferred Stock, the Dividend Preference
Rate shall be ratably adjusted to an amount equal to the Dividend Preference
Rate in effect immediately prior to such action multiplied by the number of
shares of Series B Preferred Stock outstanding immediately prior to such action
divided by the number of shares of Series B Preferred Stock outstanding
immediately after such action.
4. Redemption. Shares of Series B Preferred Stock are not redeemable by
the Corporation.
5. Liquidation and Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Series B Preferred Stock
shall be entitled to receive for each share of Series B Preferred Stock, before
any distribution of the assets of the Corporation shall be made to the holders
of any other capital stock, an amount per share equal to the Purchase Price (the
"Liquidation Rate"), plus all accrued and unpaid dividends and distributions
declared thereon, without interest. If the Corporation shall (a) pay a
distribution in shares of Series B Preferred Stock, (b) subdivide its
outstanding shares of Series B Preferred Stock into a greater number of shares,
(c) combine its outstanding shares of Series B Preferred Stock into a smaller
number of shares, or (d) issue by reclassification of its shares of Series B
Preferred Stock any shares of Series B Preferred Stock, the Liquidation Rate
shall be ratably adjusted to an amount equal to the Liquidation Rate in effect
immediately prior to such action multiplied by the number of shares of Series B
Preferred Stock outstanding immediately prior to such action divided by the
number of shares of Series B Preferred Stock outstanding immediately after such
action. After such payment shall have been made in full to the holders of the
issued and outstanding Series B Preferred Stock, or funds necessary for such
payment shall have been set aside in trust for the account of the holders of the
issued and outstanding Series B Preferred Stock so as to be and continue to be
available therefor, then the remaining assets of the Corporation shall be
divided and distributed ratably among the holders of the Common Stock and the
Series B Preferred on an as converted basis.. If, upon such liquidation,
dissolution, or winding up, the assets of the Corporation distributable, as
aforesaid, among the holders of the Series B Preferred Stock shall be
insufficient to permit the payment to them of said amount, the entire assets
shall be distributed ratably among the holders of the Series B Preferred Stock.
A consolidation, merger or reorganization of the Corporation with or into
another corporation or entity in which the holders of the Corporation's
outstanding capital stock do not retain a majority of the voting power in the
surviving corporation immediately thereafter or (ii) a sale, conveyance or
disposition of all or
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substantially all of the Corporation's assets shall be regarded as a
"liquidation, dissolution, or winding up of the affairs of the Corporation"
within the meaning of this paragraph 5.
6. Conversion Rights.
(a) Optional Conversion; Conversion Rate; Conversion Price. Each share
of Series B Preferred Stock shall be convertible, at the option of the holder
thereof, into shares of Common Stock at any time after the issuance of such
share. The number of shares of Common Stock into which each share of Series B
Preferred Stock may be converted shall be determined by dividing $8.00 by a
price, hereinafter referred to as the "Conversion Price," in effect for the
Series B Preferred Stock at the time of the conversion. The Conversion Price per
share of Series B Preferred Stock initially shall be $8.00, subject to
adjustment as provided.
(b) Automatic Conversion. Each share of Series B Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of Common
Stock of the Corporation at the Conversion Price then in effect for the Series B
Preferred Stock (subject to adjustment as provided below) upon the earlier to
occur of:
(i) the effective date of a firm commitment, underwritten public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), other than a
registration under Rule 145 of the Securities Act (or any successor thereto) or
to any employee benefit plan of the Corporation, generating aggregate proceeds
to the Company of at least Fifteen Million Dollars ($15,000,000) (before
deducting underwriters' discounts and all expenses relating to the offering),
and an offering price (prior to underwriters' discounts and expenses) per share
to the public equal to or greater than Fifteen Dollars ($15.00), appropriately
adjusted for stock dividends, stock splits, stock combinations,
recapitalizations, reclassifications, exchanges and the like ("Initial Public
Offering"); or
(ii) the date on which the holders of two-thirds (2/3) of the then
outstanding shares of Series B Preferred Stock consent in writing to such
conversion.
(c) Conversion Mechanics. The holder of any shares of Series B
Preferred Stock may exercise the conversion rights as to such shares or any part
thereof by delivering to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation, or at the principal office of
the Corporation or at such other place as may be designated by the Corporation,
the certificate or certificates for the shares to be converted, duly endorsed
for transfer to the Corporation (if required by it), accompanied by written
notice stating that the holder elects to convert such shares. Except as set
forth above, conversion shall be deemed to have been effected on the date when
such delivery is made, and such date is referred to herein as the "Conversion
Date." As promptly as practicable thereafter the Corporation shall issue and
deliver to or upon the written order of such holder, at such office or other
place designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled and a
check for cash with respect to any fractional interest in a share of Common
Stock as provided below. The holder shall be deemed to have become a shareholder
of record for the Common Stock on the applicable Conversion Date unless the
transfer books of the
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Corporation are closed on the date, in which event such holder shall be deemed
to have become a shareholder of record for the Common Stock on the next
succeeding date on which the transfer books are open. Upon conversion of only a
portion of the number of shares of Series B Preferred Stock, as the case may be,
represented by a certificate surrendered for conversion, the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new
certificate for the number of shares of Series B Preferred Stock representing
the unconverted portion of the certificate so surrendered.
(d) No Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series B Preferred Stock. If more
than one share of Series B Preferred Stock shall be surrendered for conversion
at any one time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Series B Preferred Stock so surrendered. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon
conversion of any shares of Series B Preferred Stock, the Corporation shall pay
a cash adjustment in respect of such fractional interest equal to the fair
market value of such fractional interest as determined in good faith by the
Corporation's Board of Directors.
(e) Taxes. The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion pursuant hereto of Series B Preferred Stock. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that in which the Series B Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax
has been paid.
(f) Share Reserve. The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series B Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series B
Preferred Stock from time to time outstanding. The Corporation shall from time
to time (subject to obtaining necessary director and shareholder approval, which
the Corporation shall use its best efforts to promptly obtain), in accordance
with the laws of the State of Delaware, promptly increase the authorized amount
of its Common Stock if at any time the authorized number of shares of its Common
Stock remaining unissued shall not be sufficient to permit the conversion of all
of the shares of Series B Preferred Stock at the time outstanding.
(g) Registration or Listing. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series B Preferred Stock
require registration or listing with, or approval of, any governmental
authority, stock exchange, quotation system or other regulatory body under any
federal or state law or regulation or otherwise, before such shares may be
validly issued or delivered upon conversion and traded or quoted on an exchange
or quotation system on which other shares of Common Stock are then listed or
quoted, the Corporation will in good faith
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and as expeditiously as possible endeavor to secure such registration, listing
or approval, as the case may be.
(h) Status Upon Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges created by the Corporation with respect to the
issuance thereof.
7. Adjustments.
(a) Adjustments to Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
shall at any time declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock or in any right to acquire Common Stock for
no consideration, or shall subdivide the outstanding Common Stock into a greater
number of shares of Common Stock (by stock split, reclassification or otherwise
than by payment of a dividend in Common Stock or in any right to acquire Common
Stock), or in the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, then the Conversion Price for the Series B Stock in
effect immediately prior to each such stock dividend, combination or subdivision
shall be proportionately increased or decreased, as appropriate, effective at
the close of business on the date of each such stock dividend, combination or
subdivision, as the case may be. In the event that the Corporation shall declare
or pay, without consideration, any dividend on the Common Stock payable in any
right to acquire Common Stock for no consideration then the Corporation shall be
deemed to have made a dividend payable in Common Stock in an amount of shares
equal to the maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
(b) Adjustments for Capital Reorganizations and Reclassifications. In
case of any capital reorganization (other than in connection with a merger or
other reorganization in which the Corporation is not the continuing or surviving
entity) or any reclassification of the Common Stock of the Corporation, the
Series B 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
shares of Series B Preferred Stock immediately prior to each such reorganization
or recapitalization would have been entitled upon such reorganization, or
reclassification; and, in any such case, appropriate adjustment (as determined
by the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of Series B Preferred Stock, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any share of stock or other property thereafter deliverable upon the
conversion.
(c) Noncash Dividends, Stock Purchase Rights, Capital Reorganizations
and Dissolutions. In case:
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(i) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend, or any
other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
(iii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of its outstanding shares of Common Stock),
consolidation or merger of the Corporation with or into another corporation or
conveyance of all or substantially all of the assets of the Corporation to
another corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent for Series B Preferred Stock, and to the holders of record of the
outstanding Series B Preferred Stock, at least ten (10) days prior to the date
hereinafter specified, a notice stating the date on which (x) a record is to be
taken for the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(d) Other Issuances. Upon the issuance by the Corporation of any Equity
Securities (as defined below) without consideration or for consideration per
share of Common Stock issued or issuable upon exchange, exercise or conversion
of such Equity Securities of less than the Conversion Price then in effect, then
the Conversion Price shall be adjusted to a price (calculated to the nearest
cent) determined by multiplying the Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (on a fully diluted basis) plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the newly issued Equity Securities would purchase at the
Conversion Price in effect immediately prior to such issuance, and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance (on a fully diluted basis) plus the number of
additional shares of Equity Securities so issued. For purposes of this
subsection 7(d) the following provisions will be applicable:
(i) in the case of an issue or sale for cash of shares of Common
Stock, the "consideration per share" received by the Corporation therefor shall
be deemed to be the amount of cash received, before deducting therefrom any
commissions or expenses paid by the Corporation.
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(ii) in case of the issuance (otherwise than upon conversion or
exchange of obligations or shares of stock of the Corporation) of additional
shares of Common Stock for a consideration other than cash or a consideration
partly other than cash, the amount of the consideration other than cash received
by the Corporation for such shares shall be deemed to be the fair market value
of such consideration as determined in good faith by the Board of Directors.
(iii) in case of the issuance by the Corporation in any manner of
any rights to subscribe for or to purchase shares of Common Stock, or any
options for the purchase of shares of Common Stock or stock convertible into
Common Stock, all shares of Common Stock or stock convertible into Common Stock
to which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed "outstanding"
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the shares of Common Stock or stock convertible into Common Stock
covered thereby, plus the consideration, if any, received by the Corporation for
such rights or options, shall be deemed to be the "consideration per share"
received by the Corporation (as of the date of the offering of such rights or
the granting of such options, as the case may be) for the issuance of such
shares.
(iv) in case of the issuance or issuances by the Corporation in any
manner of any obligations or of any shares of stock of the Corporation that
shall be convertible into or exchangeable for Common Stock, all shares of Common
Stock issuable upon the conversion or exchange of such obligations or shares
shall be deemed issued as of the date such obligations or shares are issued, and
the amount of the "consideration per share" received by the Corporation for such
additional shares of Common Stock shall be deemed to be the total of (X) the
amount of consideration received by the Corporation upon the issuance of such
obligations or shares, as the case may be, plus (Y) the minimum aggregate
consideration, if any, other than such obligations or shares, receivable by the
Corporation upon such conversion or exchange, except in adjustment of dividends.
The amount of the "consideration per share" received by the Corporation
upon the issuance of any rights or options referred to in subsection (iii) above
or upon the issuance of any obligations or shares which are convertible or
exchangeable as described in subsection (iv) above, and the amount of the
consideration, if any, other than such obligations or shares so convertible or
exchangeable, receivable by the Corporation upon the exercise, conversion or
exchange thereof shall be determined in the same manner provided in subsections
(i) and (ii) above with respect to the consideration received by the Corporation
in case of the issuance of additional shares of Common Stock; provided, however,
that if such obligations or shares of stock so convertible or exchangeable are
issued in payment or satisfaction of any dividend upon any stock of the
Corporation other than Common Stock, the amount of the "consideration per share"
received by the Corporation upon the original issuance of such obligations or
shares or stock so convertible or exchangeable shall be deemed to be the value
of such obligations or shares of stock, as of the date of the adoption of the
resolution declaring such dividend, as determined by the Board of Directors at
or as of that date. On the expiration of any rights or options referred to in
subsection (iii), or the termination of any right of conversion or exchange
referred to in subsection (iv), or any change in the number of shares of Common
Stock
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deliverable upon exercise of such options or rights or upon conversion of or
exchange of such convertible or exchangeable securities, the Conversion Price
then in effect shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustments made upon the issuance of such options,
rights or convertible or exchangeable securities been made upon the basis of the
delivery of only the number of shares of Common Stock actually delivered or to
be delivered upon the exercise of such rights or options or upon the conversion
or exchange of such securities.
(e) Exclusions. Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of a Conversion Price
as a result of the issuance after the effective date of this Certificate of
Designation, of (w) shares of Common Stock (or any options, warrants or rights
to purchase such shares) to officers, directors, employees or consultants of the
Corporation or its subsidiaries pursuant to stock option or stock purchase plans
or agreements or other employee benefit plans and any shares of Common Stock
issued upon exercise or conversion pursuant to such plans or agreements, (x)
shares of Common Stock (or any options, warrants or rights to purchase such
shares), which have been approved by the Board of Directors in connection with
strategic investments, licensing arrangements or debt or equipment financings,
(y) shares issuable upon conversion or exercise of securities which are
outstanding as of the date of this Certificate of Designation or (z) shares of
Common Stock (or any options, warrants or rights to purchase such shares), which
have been approved by the Board of Directors issued as consideration in
connection with mergers, acquisitions or other business combinations.
(f) Definition of Equity Securities. For purposes of this Certificate
of Designation, "Equity Securities" shall mean any securities having voting
rights in the election of the Board of Directors not contingent upon default, or
any securities evidencing an ownership interest in the Company, or any
securities convertible into or exercisable for any shares of the foregoing, or
any agreement or commitment to issue any of the foregoing.
(g) Protection of Conversion Rights. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 5 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the
holders of the Series B Preferred Stock against impairment.
8. Voting Rights. Holders of shares of Series B Preferred Stock shall be
entitled to vote on all matters submitted to a vote of the stockholders of the
Company. Each share of Series B Preferred Stock shall entitle the holder to that
number of votes equal to the number of shares of Common Stock into which such
share of Series B Preferred Stock is convertible as of the record date
established for the vote of the stockholders of the Company. Fractional votes
will not, however, be permitted, and any fractional voting rights resulting from
the above formula (after aggregating all shares of Common Stock into which
shares of Series B Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half
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being rounded upward). Except with respect to the seat on the Board of Directors
allocated to the shares of Series B Preferred Stock as described below or as
required by law, the Series B Preferred Stock will vote together with the Common
Stock and not as a separate class.
9. Board Seat. The Board of Directors shall consist of seven (7) members.
The holders of Series B Preferred Stock, voting together as a single class,
shall be entitled to designate one (1) member of the Board of Directors. The
remaining six (6) directors shall be designated by the holders of the Common
Stock and the Series B Preferred Stock, voting together as a single class.
10. No Preemptive Rights. No holder of the Series B Preferred Stock shall
be entitled, as of right, to purchase or subscribe for any part of the unissued
capital stock of the Corporation or of any capital stock of the Corporation to
be issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the Corporation or
to purchase or subscribe for any stock of the Corporation purchased by the
Corporation or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the laws of the State of Delaware.
11. Protective Covenants. So long as shares of Series B Preferred Stock
remain outstanding and for such further period as may be required by law, the
Company will not, without first obtaining the affirmative vote or written
consent of the holders of at least a majority of the then outstanding Series B
Preferred Stock voting separately as a class (i) sell, convey or otherwise
dispose of all or substantially all of assets of the Company, merge the Company
with or consolidate the Company into another entity, or engage in any other form
of corporate reorganization or recapitalization that would require the vote of
the Company's shareholders under applicable law; (ii) increase the number of
authorized shares of Series B Preferred Stock (except as a result of a stock
split or combination); (iii) effect an exchange, reclassification or
cancellation of all or a part of the shares of Series B Preferred Stock (except
as a result of a stock split or combination); (iv) effect an exchange, or create
a right of exchange, of all or part of the shares of another class into shares
of Series B Preferred Stock; (v) alter or change the rights, preferences,
privileges and restrictions of the Series B Preferred Stock; (vi) authorize or
issue shares of any class of stock having any rights, preferences or privileges
superior to any such right, preference or privilege of the Series B Preferred
Stock; (vii) authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of the Company having any
rights, preferences or privileges superior to any right, preference or privilege
of the Series B Preferred Stock; or (viii) reclassify any other outstanding
shares of stock into shares having any right, preference or privilege superior
to any such right, preference, privilege or priority of the Series B Preferred
Stock.
12. Notices of Record Date. In the event that the Company shall propose at
any time (i) to declare any dividend or distribution upon the Common Stock other
than distributions to shareholders in connection with the repurchase of shares
of former employees or consultants to which at least a majority of the holders
of Series B Preferred Stock have consented, (ii) to offer for subscription to
the holders of any class or series of its capital stock any additional shares of
stock of any class or series or any other rights, (iii) to effect any
reclassification or
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recapitalization or (iv) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then the Company will send to
the holders of the Series B Preferred Stock, at least ten (10) days' prior
written notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights and on which such event shall take place.
13. No Implied Limitations. Except as otherwise provided by the express
provisions of this Certificate of Designation of Series B Preferred Stock,
nothing herein shall limit, by inference or otherwise, the discretionary right
of the Board to classify and reclassify and issue any shares of Preferred Stock
and to fix or alter all terms thereof to the full extent provided in the
Certificate of Incorporation of the Corporation.
14. General Provisions. In addition to the above provisions with respect to
the Series B Preferred Stock, such Series B Preferred Stock shall be subject to,
and entitled to the benefits of, the provisions set forth in the Corporation's
Certificate of Incorporation with respect to the Corporation's Preferred Stock
generally.
15. Notices. All notices required or permitted to be given by the
Corporation with respect to the Series B Preferred Stock shall be in writing,
and if delivered by first class United States mail, postage prepaid, to the
holders of the Series B Preferred Stock at their last addresses as they shall
appear on the books of the Corporation, shall be conclusively presumed to have
been duly given, whether or not the stockholder actually receives such notice;
provided, however, that failure to duly give such notice by mail, or any defect
in such notice, to the holders of any stock designated for redemption, shall not
affect the validity of the proceedings for the redemption of any other shares of
Series B Preferred Stock.
SERIES C PREFERRED STOCK
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1. SERIES C Designations and Amounts. Three Million (3,000,000) shares of
the Corporation's authorized Preferred Stock are designated as Series C
Preferred Stock.
2. Definitions. For the purposes of this Certificate the following
definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Common Stock" shall refer to the Corporation's common stock with
a par value of $.001 per share.
(c) "Purchase Price" shall be $25.00.
(d) "Subsidiary" shall mean any corporation at least 51% of whose
outstanding voting stock shall at the time be owned directly or indirectly by
the Corporation or by one or more subsidiaries of the Corporation.
3. Rank. The Series C Preferred Stock shall, with respect to dividend and
other distribution rights, and rights on liquidation, dissolution, and winding
up, rank (i) pari passu with both the Series B Preferred Stock and any class or
series of capital stock hereafter created which
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expressly provides that it ranks pari passu with the Series B Preferred Stock
and Series C Preferred Stock as to dividends, other distributions, liquidation
preference, and/or otherwise, (ii) senior to the Common Stock and any other
class of capital stock hereafter created which does not expressly provide that
it ranks senior to or pari passu with the Series B Preferred Stock or Series C
Preferred Stock as to dividends, other distributions, liquidation preference,
and/or otherwise (collectively, the "Junior Securities") and (iii) junior to any
other class or series of capital stock hereafter created which expressly
provides that it ranks senior to the Series B Preferred Stock and Series C
Preferred Stock as to dividends, other distributions, liquidation preference,
and/or otherwise.
4. Dividends. The holder of each issued and outstanding share of Series C
Preferred Stock shall be entitled to receive dividends when and if declared by
the Board, out of funds legally available for such purpose. No dividends (other
than those payable solely in shares of Common Stock) may be declared or paid
with respect to shares of any Junior Securities during any fiscal year of the
Corporation until dividends in the aggregate amount of not less than $2.25 per
share (the "Series C Dividend Preference Rate") of Series C Preferred Stock (as
adjusted as provided herein) have been paid or declared and set aside with
respect to the Series C Preferred Stock during such fiscal year. If the
Corporation shall (a) pay a distribution in shares of Series C Preferred Stock,
(b) subdivide its outstanding shares of Series C Preferred Stock into a greater
number of shares, (c) combine its outstanding shares of Series C Preferred Stock
into a smaller number of shares, or (d) issue by reclassification of its shares
of Series C Preferred Stock any shares of Series C Preferred Stock, the Series C
Dividend Preference Rate shall be ratably adjusted to an amount equal to the
Series C Dividend Preference Rate in effect immediately prior to such action
multiplied by the number of shares of Series C Preferred Stock outstanding
immediately prior to such action divided by the number of shares of Series C
Preferred Stock outstanding immediately after such action.
5. Redemption. Shares of Series C Preferred Stock are not redeemable by the
Corporation.
6. Liquidation and Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Series C Preferred Stock
shall be entitled to receive for each share of Series C Preferred Stock, before
any distribution of the assets of the Corporation shall be made to the holders
of any Common Stock or other Junior Securities, an amount per share equal to the
Purchase Price (the " Series C Liquidation Rate"), plus all accrued and unpaid
dividends and distributions declared thereon, without interest. If the
Corporation shall (a) pay a distribution in shares of Series C Preferred Stock,
(b) subdivide its outstanding shares of Series C Preferred Stock into a greater
number of shares, (c) combine its outstanding shares of Series C Preferred Stock
into a smaller number of shares, or (d) issue by reclassification of its shares
of Series C Preferred Stock any additional shares of Series C Preferred Stock,
the Liquidation Rate shall be ratably adjusted to an amount equal to the Series
C Liquidation Rate in effect immediately prior to such action multiplied by the
number of shares of Series C Preferred Stock outstanding immediately prior to
such action divided by the number of shares of Series C Preferred Stock
outstanding immediately after such action. After such payment shall have been
made in full to the holders of the issued and outstanding Series B and Series C
Preferred Stock, or funds
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necessary for such payment shall have been set aside in trust for the account of
the holders of the issued and outstanding Series B and Series C Preferred Stock
so as to be and continue to be available therefor, then the remaining assets of
the Corporation shall be divided and distributed ratably among the holders of
the Common Stock and other Junior Securities. If, upon such liquidation,
dissolution, or winding up, the assets of the Corporation distributable among
the holders of the Series B and Series C Preferred Stock shall be insufficient
to permit the payment to them of said amount, the entire assets shall be
distributed ratably among the holders of the Series B and Series C Preferred
Stock in such a manner that the amount to be distributed to each holder of
Series B Preferred and Series C Preferred shall equal the amount obtained by
multiplying the entire assets and funds of the corporation legally available for
distribution hereunder by a fraction, the numerator of which shall be the sum of
the products obtained by multiplying the number of shares of Series B Preferred
and Series C Preferred then held by the holder by the respective liquidation
preference of each of such series of Preferred Stock, and the denominator of
which shall be the sum of the products obtained by multiplying the respective
liquidation preference of each of such series of Preferred Stock. A
consolidation, merger or reorganization of the Corporation with or into another
corporation or entity in which the holders of the Corporation's outstanding
capital stock do not retain a majority of the voting power in the surviving
corporation immediately thereafter or (ii) a sale, conveyance or disposition of
all or substantially all of the Corporation's assets shall be regarded as a
"liquidation, dissolution, or winding up of the affairs of the Corporation"
within the meaning of this paragraph 5.
7. Conversion Rights.
(a) Optional Conversion; Conversion Rate; Conversion Price. Each share
of Series C Preferred Stock shall be convertible, at the option of the holder
thereof, into shares of Common Stock at any time after the issuance of such
share. The number of shares of Common Stock into which each share of Series C
Preferred Stock may be converted shall be determined by dividing $12.50 by a
price, hereinafter referred to as the "Conversion Price," in effect for the
Series C Preferred Stock at the time of the conversion. The Conversion Price per
share of Series C Preferred Stock initially shall be $12.50, subject to
adjustment as provided.
(b) Automatic Conversion. Each share of Series C Preferred Stock shall
automatically be converted into fully paid and nonassessable shares of Common
Stock of the Corporation at the Conversion Price then in effect for the Series C
Preferred Stock (subject to adjustment as provided below) upon the earlier to
occur of:
(i) the effective date of a firm commitment, underwritten public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), other than a
registration under Rule 145 of the Securities Act (or any successor thereto) or
to any employee benefit plan of the Corporation, generating aggregate proceeds
to the Company of at least Twenty Five Million Dollars ($25,000,000) (before
deducting underwriters' discounts and all expenses relating to the offering),
and an offering price (prior to underwriters' discounts and expenses) of not
less than Forty Dollars ($40.00) per share, appropriately adjusted for stock
dividends, stock splits, stock combinations, recapitalizations,
reclassifications, exchanges and the like ("Initial Public
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Offering"), provided, however, that such automatic conversion shall not be
deemed to have occurred in the event that the Initial Public Offering does not
close; or
(ii) the date on which the holders of two-thirds (2/3) of the then
outstanding shares of Series C Preferred Stock consent in writing to such
conversion.
(c) Conversion Mechanics. The holder of any shares of Series C
Preferred Stock may exercise the conversion rights as to such shares or any part
thereof by delivering to the Corporation during regular business hours, at the
office of any transfer agent of the Corporation, or at the principal office of
the Corporation or at such other place as may be designated by the Corporation,
the certificate or certificates for the shares to be converted, duly endorsed
for transfer to the Corporation (if required by it), accompanied by written
notice stating that the holder elects to convert such shares. Except as set
forth above, conversion shall be deemed to have been effected on the date when
such delivery is made, and such date is referred to herein as the "Conversion
Date." As promptly as practicable thereafter the Corporation shall issue and
deliver to or upon the written order of such holder, at such office or other
place designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which such holder is entitled and a
check for cash with respect to any fractional interest in a share of Common
Stock as provided below. The holder shall be deemed to have become a shareholder
of record for the Common Stock on the applicable Conversion Date unless the
transfer books of the Corporation are closed on the date, in which event such
holder shall be deemed to have become a shareholder of record for the Common
Stock on the next succeeding date on which the transfer books are open. Upon
conversion of only a portion of the number of shares of Series C Preferred
Stock, as the case may be, represented by a certificate surrendered for
conversion, the Corporation shall issue and deliver to or upon the written order
of the holder of the certificate so surrendered for conversion, at the expense
of the Corporation, a new certificate for the number of shares of Series C
Preferred Stock representing the unconverted portion of the certificate so
surrendered.
(d) No Fractional Shares. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series C Preferred Stock. If
more than one share of Series C Preferred Stock shall be surrendered for
conversion at any one time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares of Series C Preferred Stock so surrendered.
Instead of any fractional shares of Common Stock which would otherwise be
issuable upon conversion of any shares of Series C Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest
equal to the fair market value of such fractional interest as determined in good
faith by the Corporation's Board of Directors.
(e) Taxes. The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock on conversion pursuant hereto of Series C Preferred Stock. The Corporation
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Common Stock in
a name other than that in which the Series C Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and until the
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person requesting such issue has paid to the Corporation the amount of any such
tax, or has established, to the satisfaction of the Corporation, that such tax
has been paid.
(f) Share Reserve. The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Series C Preferred Stock, the full
number of shares of Common Stock deliverable upon the conversion of all Series C
Preferred Stock from time to time outstanding. The Corporation shall from time
to time (subject to obtaining necessary director and shareholder approval, which
the Corporation shall use its best efforts to promptly obtain), in accordance
with the laws of the State of Nevada, promptly increase the authorized amount of
its Common Stock if at any time the authorized number of shares of its Common
Stock remaining unissued shall not be sufficient to permit the conversion of all
of the shares of Series C Preferred Stock at the time outstanding.
(g) Registration or Listing. If any shares of Common Stock to be
reserved for the purpose of conversion of shares of Series C Preferred Stock
require registration or listing with, or approval of, any governmental
authority, stock exchange, quotation system or other regulatory body under any
federal or state law or regulation or otherwise, before such shares may be
validly issued or delivered upon conversion and traded or quoted on an exchange
or quotation system on which other shares of Common Stock are then listed or
quoted, the Corporation will in good faith and as expeditiously as possible
endeavor to secure such registration, listing or approval, as the case may be.
(h) Status Upon Issuance. All shares of Common Stock which may be
issued upon conversion of the shares of Preferred Stock will upon issuance by
the Corporation be validly issued, fully paid and non-assessable and free from
all taxes, liens and charges created by the Corporation with respect to the
issuance thereof.
8. Adjustments.
(a) Adjustments to Conversion Prices for Stock Dividends and for
Combinations or Subdivisions of Common Stock. In the event that the Corporation
shall at any time declare or pay, without consideration, any dividend on the
Common Stock payable in Common Stock or in any right to acquire Common Stock for
no consideration, or shall subdivide the outstanding Common Stock into a greater
number of shares of Common Stock (by stock split, reclassification or otherwise
than by payment of a dividend in Common Stock or in any right to acquire Common
Stock), or in the event the outstanding shares of Common Stock shall be combined
or consolidated, by reclassification or otherwise, into a lesser number of
shares of Common Stock, then the Conversion Price for the Series C Stock in
effect immediately prior to each such stock dividend, combination or subdivision
shall be proportionately increased or decreased, as appropriate, effective at
the close of business on the date of each such stock dividend, combination or
subdivision, as the case may be. In the event that the Corporation shall declare
or pay, without consideration, any dividend on the Common Stock payable in any
right to acquire Common Stock for no consideration then the Corporation shall be
deemed to have made a dividend payable in Common Stock in an amount of shares
equal to the maximum number of shares issuable upon exercise of such rights to
acquire Common Stock.
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(b) Adjustments for Capital Reorganizations and Reclassifications. In
case of any capital reorganization (other than in connection with a merger or
other reorganization in which the Corporation is not the continuing or surviving
entity) or any reclassification of the Common Stock of the Corporation, the
Series C 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
shares of Series C Preferred Stock immediately prior to each such reorganization
or recapitalization would have been entitled upon such reorganization, or
reclassification; and, in any such case, appropriate adjustment (as determined
by the Board of Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of Series C Preferred Stock, to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any share of stock or other property thereafter deliverable upon the
conversion.
(c) Noncash Dividends, Stock Purchase Rights, Capital Reorganizations
and Dissolutions. In case:
(i) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend, or any
other distribution, payable otherwise than in cash; or
(ii) the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to subscribe for or purchase any
shares of stock of any class or to receive any other rights; or
(iii) of any capital reorganization of the Corporation,
reclassification of the capital stock of the Corporation (other than a
subdivision or combination of its outstanding shares of Common Stock),
consolidation or merger of the Corporation with or into another corporation or
conveyance of all or substantially all of the assets of the Corporation to
another corporation; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;
then, and in any such case, the Corporation shall cause to be mailed to the
transfer agent for Series C Preferred Stock, and to the holders of record of the
outstanding Series C Preferred Stock, at least ten (10) days prior to the date
hereinafter specified, a notice stating the date on which (x) a record is to be
taken for the purpose of such dividend, distribution or rights, or (y) such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place and the date, if any is
to be fixed, as of which holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
(d) Other Issuances. Upon the issuance by the Corporation of any Equity
Securities (as defined below) without consideration or for consideration per
share of Common
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Stock issued or issuable upon exchange, exercise or conversion of such Equity
Securities of less than the Conversion Price then in effect, then the Conversion
Price shall be adjusted to a price (calculated to the nearest cent) determined
by multiplying the Conversion Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
issuance (on a fully diluted basis) plus the number of shares of Common Stock
which the aggregate consideration received by the Corporation for the newly
issued Equity Securities would purchase at the Conversion Price in effect
immediately prior to such issuance, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issuance
(on a fully diluted basis) plus the number of additional shares of Equity
Securities so issued. For purposes of this subsection 7(d) the following
provisions will be applicable:
(i) in the case of an issue or sale for cash of shares of Common
Stock, the "consideration per share" received by the Corporation therefor shall
be deemed to be the amount of cash received, before deducting therefrom any
commissions or expenses paid by the Corporation.
(ii) in case of the issuance (otherwise than upon conversion or
exchange of obligations or shares of stock of the Corporation) of additional
shares of Common Stock for a consideration other than cash or a consideration
partly other than cash, the amount of the consideration other than cash received
by the Corporation for such shares shall be deemed to be the fair market value
of such consideration as determined in good faith by the Board of Directors.
(iii) in case of the issuance by the Corporation in any manner of
any rights to subscribe for or to purchase shares of Common Stock, or any
options for the purchase of shares of Common Stock or stock convertible into
Common Stock, all shares of Common Stock or stock convertible into Common Stock
to which the holders of such rights or options shall be entitled to subscribe
for or purchase pursuant to such rights or options shall be deemed "outstanding"
as of the date of the offering of such rights or the granting of such options,
as the case may be, and the minimum aggregate consideration named in such rights
or options for the shares of Common Stock or stock convertible into Common Stock
covered thereby, plus the consideration, if any, received by the Corporation for
such rights or options, shall be deemed to be the "consideration per share"
received by the Corporation (as of the date of the offering of such rights or
the granting of such options, as the case may be) for the issuance of such
shares.
(iv) in case of the issuance or issuances by the Corporation in any
manner of any obligations or of any shares of stock of the Corporation that
shall be convertible into or exchangeable for Common Stock, all shares of Common
Stock issuable upon the conversion or exchange of such obligations or shares
shall be deemed issued as of the date such obligations or shares are issued, and
the amount of the "consideration per share" received by the Corporation for such
additional shares of Common Stock shall be deemed to be the total of (X) the
amount of consideration received by the Corporation upon the issuance of such
obligations or shares, as the case may be, plus (Y) the minimum aggregate
consideration, if any, other than such obligations or shares, receivable by the
Corporation upon such conversion or exchange, except in adjustment of dividends.
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The amount of the "consideration per share" received by the Corporation
upon the issuance of any rights or options referred to in subsection (iii) above
or upon the issuance of any obligations or shares which are convertible or
exchangeable as described in subsection (iv) above, and the amount of the
consideration, if any, other than such obligations or shares so convertible or
exchangeable, receivable by the Corporation upon the exercise, conversion or
exchange thereof shall be determined in the same manner provided in subsections
(i) and (ii) above with respect to the consideration received by the Corporation
in case of the issuance of additional shares of Common Stock; provided, however,
that if such obligations or shares of stock so convertible or exchangeable are
issued in payment or satisfaction of any dividend upon any stock of the
Corporation other than Common Stock, the amount of the "consideration per share"
received by the Corporation upon the original issuance of such obligations or
shares or stock so convertible or exchangeable shall be deemed to be the value
of such obligations or shares of stock, as of the date of the adoption of the
resolution declaring such dividend, as determined by the Board of Directors at
or as of that date. On the expiration of any rights or options referred to in
subsection (iii), or the termination of any right of conversion or exchange
referred to in subsection (iv), or any change in the number of shares of Common
Stock deliverable upon exercise of such options or rights or upon conversion of
or exchange of such convertible or exchangeable securities, the Conversion Price
then in effect shall forthwith be readjusted to such Conversion Price as would
have been obtained had the adjustments made upon the issuance of such options,
rights or convertible or exchangeable securities been made upon the basis of the
delivery of only the number of shares of Common Stock actually delivered or to
be delivered upon the exercise of such rights or options or upon the conversion
or exchange of such securities.
(e) Exclusions. Anything herein to the contrary notwithstanding, the
Corporation shall not be required to make any adjustment of a Conversion Price
as a result of the issuance after the effective date of this Certificate of
Designation, of (w) shares of Common Stock (or any options, warrants or rights
to purchase such shares) to officers, directors, employees or consultants of the
Corporation or its subsidiaries pursuant to stock option or stock purchase plans
or agreements or other employee benefit plans and any shares of Common Stock
issued upon exercise or conversion pursuant to such plans or agreements, (x)
shares of Common Stock (or any options, warrants or rights to purchase such
shares), which have been approved by the Board of Directors in connection with
strategic investments, licensing arrangements or debt or equipment financings,
(y) shares issuable upon conversion or exercise of securities which are
outstanding as of the date of this Certificate of Designation or (z) shares of
Common Stock (or any options, warrants or rights to purchase such shares), which
have been approved by the Board of Directors issued as consideration in
connection with mergers, acquisitions or other business combinations.
(f) Definition of Equity Securities. For purposes of this Certificate
of Designation, "Equity Securities" shall mean any securities having voting
rights in the election of the Board of Directors not contingent upon default, or
any securities evidencing an ownership interest in the Company, or any
securities convertible into or exercisable for any shares of the foregoing, or
any agreement or commitment to issue any of the foregoing.
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(g) Protection of Conversion Rights. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 8 and in the taking of all such action as may
be necessary or appropriate in order to protect the conversion rights of the
holders of the Series C Preferred Stock against impairment.
9. Voting Rights. Holders of shares of Series C Preferred Stock shall be
entitled to vote on all matters submitted to a vote of the stockholders of the
Company. Each share of Series C Preferred Stock shall entitle the holder to that
number of votes equal to the number of shares of Common Stock into which such
share of Series C Preferred Stock is convertible as of the record date
established for the vote of the stockholders of the Company. Fractional votes
will not, however, be permitted, and any fractional voting rights resulting from
the above formula (after aggregating all shares of Common Stock into which
shares of Series C Preferred Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half being rounded upward).
Except with respect to the seat on the Board of Directors allocated to the
shares of Series C Preferred Stock as described below or as required by law, the
Series C Preferred Stock will vote together with the Common Stock and not as a
separate class.
10. Board Seat. The holders of the Series C Preferred Stock, voting
together as a single class, shall be entitled to designate two (2) members of
the Board of Directors. The remaining directors shall be designated by the
holders of the Common Stock, the Series B Preferred Stock, and the Series C
Preferred Stock voting together as a single class.
11. No Preemptive Rights. No holder of the Series C Preferred Stock shall
be entitled, as of right, to purchase or subscribe for any part of the unissued
capital stock of the Corporation or of any capital stock of the Corporation to
be issued by reason of any increase of the authorized capital stock of the
Corporation, or to purchase or subscribe for any bonds, certificates of
indebtedness, debentures, or other securities convertible into or carrying
options or warrants to purchase stock or other securities of the Corporation or
to purchase or subscribe for any stock of the Corporation purchased by the
Corporation or by its nominee or nominees, or to have any other preemptive
rights now or hereafter defined by the General Corporation Law of the State of
Delaware.
12. Protective Covenants. So long as shares of Series C Preferred Stock
remain outstanding and for such further period as may be required by law, the
Company will not, without first obtaining the affirmative vote or written
consent of the holders of at least a majority of the then outstanding Series C
Preferred Stock voting separately as a class (i) sell, convey or otherwise
dispose of all or substantially all of assets of the Company, merge the Company
with or consolidate the Company into another entity, or engage in any other form
of corporate reorganization or recapitalization that would require the vote of
the Company's shareholders under applicable law; (ii) increase the number of
authorized shares of Series C Preferred Stock (except as a result of a stock
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split or combination); (iii) effect an exchange, reclassification or
cancellation of all or a part of the shares of Series C Preferred Stock (except
as a result of a stock split or combination); (iv) effect an exchange, or create
a right of exchange, of all or part of the shares of another class into shares
of Series C Preferred Stock; (v) alter or change the rights, preferences,
privileges and restrictions of the Series C Preferred Stock; (vi) authorize or
issue shares of any class of stock having any rights, preferences or privileges
superior to any such right, preference or privilege of the Series C Preferred
Stock; (vii) authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of the Company having any
rights, preferences or privileges superior to any right, preference or privilege
of the Series C Preferred Stock; or (viii) reclassify any other outstanding
shares of stock into shares having any right, preference or privilege superior
to any such right, preference, privilege or priority of the Series C Preferred
Stock.
13. Notices of Record Date. In the event that the Company shall propose at
any time (i) to declare any dividend or distribution upon the Common Stock other
than distributions to shareholders in connection with the repurchase of shares
of former employees or consultants to which at least a majority of the holders
of Series C Preferred Stock have consented, (ii) to offer for subscription to
the holders of any class or series of its capital stock any additional shares of
stock of any class or series or any other rights, (iii) to effect any
reclassification or recapitalization or (iv) to merge or consolidate with or
into any other corporation, or sell, lease or convey all or substantially all
its property or business, or to liquidate, dissolve or wind up; then the Company
will send to the holders of the Series C Preferred Stock, at least ten (10)
days' prior written notice of the date on which a record shall be taken for such
dividend, distribution or subscription rights and on which such event shall take
place.
14. No Implied Limitations. Except as otherwise provided by the express
provisions of this Certificate of Designation of Series C Preferred Stock,
nothing herein shall limit, by inference or otherwise, the discretionary right
of the Board to classify and reclassify and issue any shares of Preferred Stock
and to fix or alter all terms thereof to the full extent provided in the
Certificate of Incorporation of the Corporation.
15. General Provisions. In addition to the above provisions with respect to
the Series C Preferred Stock, such Series C Preferred Stock shall be subject to,
and entitled to the benefits of, the provisions set forth in the Corporation's
Certificate of Incorporation with respect to the Corporation's Preferred Stock
generally.
16. Notices. All notices required or permitted to be given by the
Corporation with respect to the Series C Preferred Stock shall be in writing,
and if delivered by first class United States mail, postage prepaid, to the
holders of the Series C Preferred Stock at their last addresses as they shall
appear on the books of the Corporation, shall be conclusively presumed to have
been duly given, whether or not the stockholder actually receives such notice;
provided, however, that failure to duly give such notice by mail, or any defect
in such notice, to the holders of any stock designated for redemption, shall not
affect the validity of the proceedings for the redemption of any other shares of
Series C Preferred Stock.
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ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon the stockholders
herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the General
-----------------------
Corporation Law of the State of Delaware as the same exists or as may hereafter
be amended, a director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
---------------
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII, nor
----------
the adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article VII, shall eliminate or reduce the effect of this
Article VII, in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article VII, would accrue or arise,
prior to such amendment, repeal, or adoption of an inconsistent provision.
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The foregoing Amended and Restated Certificate of Incorporation has been
duly adopted by this Corporation's Board of Directors and stockholders in
accordance with the applicable provisions of Sections 228, 242, and 245 of the
General Corporation Law of the State of Delaware.
Dated: August 11, 2000
s/s Robert I. Webber
--------------------
Robert I. Webber, President
s/s Quynh Trinh
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Quynh Trinh, Secretary
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