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EXHIBIT 3.3
CERTIFICATE OF DESIGNATION
OF RIGHTS AND PREFERENCES
OF
CLASS A PREFERRED STOCK,
CLASS B PREFERRED STOCK AND
CLASS C PREFERRED STOCK
OF
REGENERATION TECHNOLOGIES, INC.
Pursuant to Section 151(g)
of the General Corporation Law of
THE STATE OF DELAWARE
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Regeneration Technologies, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation"), pursuant to authority conferred on the Board of
Directors of the Corporation by the Certificate of Incorporation and in
accordance with the provisions of Section 151 of the General Corporation Law
of the State of Delaware, certifies that the Board of Directors of the
Corporation, at a meeting held on April 25, 2000, duly adopted the following
resolution:
RESOLVED, that this Board of Directors, pursuant to authority
expressly vested in it by the provisions of the Certificate of Incorporation
of the Corporation, hereby authorizes the issue from time to time of one
series of Preferred Stock of the Corporation and the designations,
preferences and the relative, participating, optional or other rights, and
the qualifications, limitations or restrictions thereof, in addition to those
set forth in said Certificate of Incorporation, to be in their entirety as
follows:
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1. DESIGNATION AND NUMBER.
(a) One million seven hundred seventy-seven thousand three
hundred forty-eight (1,777,348) shares of the authorized and unissued
Preferred Stock of the Corporation are hereby designated Class A Preferred
Stock ("Class A Preferred Stock") with the rights, preferences, powers,
privileges and restrictions, qualifications and limitations set forth below.
(b) Seven hundred forty-eight thousand one hundred fifty-two
(748,152) shares of the authorized and unissued Preferred Stock of the
Corporation are hereby designated Class B Preferred Stock ("Class B Preferred
Stock") with the rights, preferences, powers, privileges and restrictions,
qualifications and limitations set forth below.
(c) Three hundred sixty-eight thousand nine hundred ninety
(368,990) shares of the authorized and unissued Preferred Stock of the
Corporation are hereby designated Class C Preferred Stock ("Class C Preferred
Stock") with the rights, preferences, powers, privileges and restrictions,
qualifications and limitations set forth below.
2. DIVIDENDS. Whenever any dividend or other distribution is declared
on any shares of Preferred Stock, the Board of Directors shall declare a
dividend or distribution on those shares of Preferred Stock then outstanding
as follows:
(a) CLASS C PREFERRED STOCK DIVIDEND. The holders of the Class
C Preferred Stock shall be entitled to receive, out of funds legally
available therefor, prior and in preference to any declaration or payment of
any dividend (payable other than in Common Stock or other securities and
rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of the Corporation) on any
other class or series of Preferred Stock or Common Stock of the Corporation,
when and if declared by the Board of Directors, annual cumulative dividends
at the rate per annum of 6% of the Class C Stock Value (as defined below), as
adjusted for stock splits, stock dividends, recapitalizations,
reclassifications and similar events which affect the number of outstanding
shares of the Class C Preferred Stock. The "Class C Stock Value" shall be
equal to $27.101 per share. Cumulative dividends will accrue regardless of
whether there are profits, surplus or other funds of the Corporation legally
available for payment of dividends.
(b) CLASS A PREFERRED AND CLASS B PREFERRED STOCK DIVIDEND.
Subject to the dividend preference rights of the holders of Series C
Preferred Stock (as described in Section 1(a)), whenever any dividend or
other distribution is declared on any shares of Class A Preferred Stock or
Class B Preferred Stock, the Board of Directors shall simultaneously declare
a dividend or distribution on those shares of Class A Preferred Stock and
Class B Preferred Stock, if any, on which no dividend or other distribution
was declared, based on the relative aggregate Liquidation value of the
outstanding shares of Class A Preferred Stock and Class B Preferred Stock, so
that the outstanding shares of Class A Preferred Stock and Class B Preferred
Stock will participate equally with each other in such dividend or other
distribution.
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The holders of the Class A Preferred Stock and Class B Preferred Stock shall
be entitled to receive, out of funds legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than
in Common Stock or other securities and rights convertible into or entitling
the holder thereof to receive, directly or indirectly, additional shares of
Common Stock of the Corporation) on the Common Stock of the Corporation, when
and if declared by the Board of Directors, annual cumulative dividends at the
rate per annum of 6% of the Class A Stock Value and the Class B Stock Value
(as defined below), as adjusted for stock splits, stock dividends,
recapitalizations, reclassifications and similar events which affect the
number of outstanding shares of the Class A Preferred Stock and Class B
Preferred Stock. The "Class A Stock Value" shall be equal to $7.84 per share.
The "Class B Stock Value" shall be equal to $8.795 per share. Cumulative
dividends will accrue regardless of whether there are profits, surplus or
other funds of the Corporation legally available for payment of dividends.
(c) ADDITIONAL PREFERRED STOCK DIVIDEND. Subject to the other
terms hereof, whenever any dividend or other distribution is declared on any
shares of Common Stock of the Corporation, the Board of Directors shall
simultaneously declare a dividend or distribution on those shares of Class A
Preferred Stock, Class B Preferred Stock and Class C Preferred Stock then
outstanding, so that the outstanding shares of Class A Preferred Stock, Class
B Preferred Stock and Class C Preferred Stock will participate equally with
the holders of Common Stock in such dividend on an as-if-converted basis.
(d) OTHER. So long as any shares of Class C Preferred Stock
are outstanding, the Corporation shall not declare or pay any dividend or
make any distribution (whether in cash or other property, other than stock
dividends referred to in subsection (vii) of Section 5(d)), to the holders of
any other class or series of Preferred Stock or Junior Stock (as defined
below), unless such dividend or distribution also is payable to the holders
of Class C Preferred Stock.
3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) The Corporation shall not effectuate any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation (a
"Liquidation") unless such Liquidation has been approved by the holders of
75% of the Class A Preferred Stock, the holders of 75% of the Class B
Preferred Stock, and the holders of 75% of the Class C Preferred Stock, each
voting separately as a class.
(b) CLASS C PREFERRED STOCK. In the event of any Liquidation,
the holders of shares of Class C Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, before any payment shall be made to the
holders of Junior Stock or any other class or series of Preferred Stock then
outstanding, an amount per share equal to the Class C Stock Value (subject to
Adjustment).
(c) CLASS A PREFERRED STOCK AND CLASS B PREFERRED STOCK. In
the event of any Liquidation, the holders of shares of Class A Preferred
Stock and B Preferred Stock then outstanding shall be simultaneously entitled
to be paid out of the assets of the Corporation available for distribution to
its
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stockholders, after payment has been made to holders of shares of Class C
Preferred Stock then outstanding, but before any payment shall be made to the
holders of Junior Stock or any other class or series of Preferred Stock then
outstanding, an amount per share equal to the Class A Preferred Stock and the
Class B Stock Value, respectively (subject to Adjustment).
(d) ADDITIONAL DISTRIBUTION UPON LIQUIDATION.
(i) CLASS C PREFERRED STOCK. In addition to and after
all distributions made pursuant to Sections 3(b) and 3(c), in the event of a
Liquidation, the holders of shares of the Class C Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, prior and in preference to
any other class or series of Preferred Stock or Common Stock of the
Corporation, an amount equal to all accrued but unpaid dividends thereon. If,
upon any such liquidation, dissolution or winding up of the Corporation, the
remaining assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay all holders of shares of the Class
C Preferred Stock the full amount to which they shall be entitled under this
Section 3(d)(i), the holders of shares of the Class C Preferred Stock shall
share ratably in the distribution of the entire remaining assets and funds of
the Corporation legally available for distribution in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect
to such shares were paid in full.
(ii) CLASS A PREFERRED STOCK AND CLASS B PREFERRED
STOCK. In addition to and after all distributions made pursuant to Sections
3(b) and 3(c), the holders of shares of the Class A Preferred Stock and the
Class B Preferred Stock then outstanding shall be entitled to be paid out of
the assets of the Corporation available for distribution to its stockholders,
after and subject to the payment in full of all amounts required to be
distributed to the holders of shares of the Class C Preferred Stock pursuant
to Section 3(d)(i), but before any payment shall be made to the holders of
Junior Stock by reason of their ownership thereof, an amount equal to all
accrued but unpaid dividends thereon. If, upon any such liquidation,
dissolution or winding up of the Corporation, the remaining assets of the
Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of the Class A Preferred Stock and
the Class B Preferred Stock the full amount to which they shall be entitled
under this Section 3(d)(ii), the holders of shares of the Class A Preferred
Stock and the Class B Preferred Stock shall share ratably in the distribution
of the entire remaining assets and funds of the Corporation legally available
for distribution in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were
paid in full.
The Class C Preferred Stock shall rank, as to dividends and upon
Liquidation, senior in priority to the Class A Preferred Stock and the Class
B Preferred Stock. The Class A Preferred Stock and the Class B Preferred
Stock shall rank, as to dividends and upon Liquidation, on parity with each
other, junior to the liquidation rights of the Class C Preferred, as
described in Section 3(b) hereof, and senior and prior to the Common Stock
and to any other class or series of shares issued by the Corporation (the
"Junior Stock").
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4. VOTING.
(a) GENERAL. Each holder of outstanding shares of Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of Preferred Stock held by such
holder are convertible (as adjusted from time to time pursuant to Section 5
hereof), at each meeting of the stockholders of the Corporation with respect
to any and all matters presented to the stockholders of the Corporation for
their action or consideration. Except as provided by law, the provisions of
Subsections 4(b), 4(c) or 4(d) below or by the provisions establishing any
other class or series of Preferred Stock, holders of Preferred Stock shall
vote together with the holders of Common Stock as a single class.
(b) CLASS A PREFERRED STOCK.
(i) AMENDMENT. Any amendment or change in the rights,
preferences or privileges of the Class A Preferred Stock shall require the
affirmative vote of the holders of at least a majority of the outstanding
shares thereof voting as a separate class.
(ii) BOARD OF DIRECTORS. The holders of record of the
shares of Class A Preferred Stock, exclusively and as a separate class, shall
be entitled to elect two (2) directors of the Corporation. 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 Class A Preferred Stock
then outstanding shall constitute a quorum of the Class A Preferred Stock for
the purpose of electing the director by holders of the Class A Preferred
Stock. A vacancy in the directorship filled by the holders of Class A
Preferred Stock shall be filled only by vote of the holders of the Class A
Preferred Stock.
(iii) The Corporation shall not, without first
obtaining the written consent or affirmative vote of the holders of at least
two-thirds (2/3) of the then outstanding shares of Class A Preferred Stock,
given in writing or by vote at a meeting, consenting or voting (as the case
may be) separately as a class:
(A) authorize or issue any other class or series
of stock senior to or on parity with the Class A Preferred Stock or take
other actions materially affecting the rights, powers or privileges of the
Class A Preferred Stock, other than up to 368,990 shares of Class C Preferred
Stock;
(B) amend, alter or repeal any provision of the
Articles of Incorporation or the By-laws of the Corporation that adversely
affects the rights, power, or privileges of the Class B Preferred Stock,
including, but not limited to, an increase in the number of directors of the
Corporation;
(C) incur any indebtedness that is greater than
the aggregate amount
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of all accounts receivable of the Corporation;
(D) repurchase, redeem, or otherwise acquire,
directly or indirectly, any shares, or any securities convertible into any
shares, of the Common Stock or any other capital stock of the Corporation,
other than unvested shares repurchased from former employees pursuant to a
stock restriction agreement between the employee and the Corporation;
(E) effect any sale, conveyance or other
disposition of, or encumbrance upon, all or substantially all of its property
or business or merge into or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than 50% of the voting power of
the Corporation is disposed of;
(F) enter into or repay any obligation or
indebtedness to any officer, director or employee of the Corporation, except
for obligations or indebtedness (i) incurred in the ordinary course of
business or (ii) the terms of which are no less favorable to the Corporation
than if such obligations or indebtedness had been the result of an arms
length negotiations with parties unrelated to the Corporation; or
(G) sell, encumber or otherwise dispose of any
of the Intellectual Property (as defined below) of the Corporation, other
than (i) licensing arrangements entered into in the ordinary course of
business or (ii) other dispositions in the ordinary course of business that
have been approved by the Board of Directors. "Intellectual Property" shall
mean all patents, patent applications, trademarks, service marks, trademark
and service mark applications, trade names, copyrights and licenses that are
owned or held by the Company.
(c) CLASS B PREFERRED STOCK.
(i) AMENDMENT. Any amendment or change in the rights,
preferences or privileges of the Class B Preferred Stock shall require the
affirmative vote of the holders of at least two-thirds (2/3) of the
outstanding shares thereof voting as a separate class.
(ii) BOARD OF DIRECTORS. The holders of record of the
shares of Class B Preferred Stock, exclusively and as a separate class, shall
be entitled to elect two (2) directors of the Corporation. 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 Class B Preferred Stock
then outstanding shall constitute a quorum of the Class B Preferred Stock for
the purpose of electing the director by holders of the Class B Preferred
Stock. A vacancy in the directorship filled by the holders of Class B
Preferred Stock shall be filled only by vote of the holders of the Class A
Preferred Stock.
(iii) The Corporation shall not, without first
obtaining the written consent or affirmative vote of the holders of at least
two-thirds (2/3) of the then outstanding shares of Class B
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Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a class:
(A) authorize or issue any other class or series
of stock senior to or on parity with the Class B Preferred Stock or take
other actions materially affecting the rights, powers or privileges of the
Class B Preferred Stock, other than up to 368,990 shares of Class C Preferred
Stock;
(B) amend, alter or repeal any provision of the
Articles of Incorporation or the By-laws of the Corporation that adversely
affects the rights, power, or privileges of the Class B Preferred Stock,
including, but not limited to, an increase in the number of directors of the
Corporation;
(C) incur any indebtedness that is greater than
the aggregate amount of all accounts receivable of the Corporation;
(D) repurchase, redeem, or otherwise acquire,
directly or indirectly, any shares, or any securities convertible into any
shares, of the Common Stock or any other capital stock of the Corporation,
other than unvested shares repurchased from former employees pursuant to a
stock restriction agreement between the employee and the Corporation;
(E) effect any sale, conveyance or other
disposition of, or encumbrance upon, all or substantially all of its property
or business or merge into or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than 50% of the voting power of
the Corporation is disposed of;
(F) enter into or repay any obligation or
indebtedness to any officer, director or employee of the Corporation, except
for obligations or indebtedness (i) incurred in the ordinary course of
business or (ii) the terms of which are no less favorable to the Corporation
than if such obligations or indebtedness had been the result of an arms
length negotiations with parties unrelated to the Corporation; or
(G) sell, encumber or otherwise dispose of any
of the Intellectual Property (as defined below) of the Corporation, other
than (i) licensing arrangements entered into in the ordinary course of
business or (ii) other dispositions in the ordinary course of business that
have been approved by the Board of Directors.
(d) CLASS C PREFERRED STOCK.
(i) AMENDMENT. Any amendment or change in the rights,
preferences or privileges of the Class C Preferred Stock shall require the
affirmative vote of the holders of at least two thirds (2/3) of the
outstanding shares thereof voting as a separate class.
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(ii) BOARD OF DIRECTORS.
(A) Stephens-Regeneration LLC ("Stephens") may,
for so long as it is a holder of at least 25% of the shares of Class C
Preferred Stock originally issued to Stephens by the Corporation, from time
to time, appoint a representative to attend meetings of the Board of
Directors of the Corporation or any committees thereof as an observer (the
"Observer"). The Observer is not entitled to vote on any matters before the
Board of Directors or any committees thereof. Neither Stephens nor the
Observer shall have any duties, responsibilities or liability by virtue of
attendance at such meetings or the failure to attend the same, subject to
those certain confidentiality requirements specified in the Stockholders'
Agreement of the Corporation dated as of October 8, 1999 (the "Stockholders'
Agreement"). The Corporation shall notify the Observer of all Board of
Directors meetings at the same time as the Corporation notifies Directors of
such meetings and the Observer shall be entitled to all written materials
Directors are entitled to receive.
(B) Medtronic Asset Management, Inc.
("Medtronic") or any of its affiliates may, for so long as Medtronic or any
such affiliate, as the case may be, is a holder of at least 25% of the shares
of Class C Preferred Stock originally issued to Medtronic by the Corporation,
from time to time, appoint an Observer to attend meetings of the Board of
Directors of the Corporation or any committees thereof. The Observer is not
entitled to vote on any matters before the Board of Directors or any
committees thereof. Neither Medtronic nor the Observer shall have any duties,
responsibilities or liability by virtue of attendance at such meetings or the
failure to attend the same, subject to those certain confidentiality
requirements specified in the Stockholders' Agreement. The Corporation shall
notify the Observer of all Board of Directors meetings at the same time as
the Corporation notifies Directors of such meetings and the Observer shall be
entitled to all written materials Directors are entitled to receive.
Notwithstanding the foregoing, until such time as Medtronic shall have
exercised the Medtronic Election (as defined in the Stockholders' Agreement),
Medtronic shall not have the right to appoint an Observer pursuant to this
Section 4(d)(ii).
(iii) The Corporation shall not, without first
obtaining the written consent or affirmative vote of the holders of
two-thirds (2/3) of the then outstanding shares of Class C Preferred Stock,
given in writing or by vote at a meeting, consenting or voting (as the case
may be) separately as a class:
(A) authorize or issue any other Class or series
of stock senior to or on parity with the Class C Preferred Stock or take
other actions materially affecting the rights, powers or privileges of the
Class C Preferred Stock;
(B) amend, alter or repeal any provision of the
Articles of Incorporation or the By-laws of the Corporation that adversely
affects the rights, power, or privileges of the Class C Preferred Stock,
including, but not limited to, an increase in the number of directors of the
Corporation;
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(C) incur any indebtedness that is greater than
the aggregate amount of all accounts receivable of the Corporation;
(D) repurchase, redeem, or otherwise acquire,
directly or indirectly, any shares, or any securities convertible into any
shares, of the Common Stock or any other capital stock of the Corporation,
other than unvested shares repurchased from former employees pursuant to a
stock restriction agreement between the employee and the Corporation;
(E) effect any sale, conveyance or other
disposition of, or encumbrance upon, all or substantially all of its property
or business or merge into or consolidate with any other corporation (other
than a wholly-owned subsidiary corporation) or effect any transaction or
series of related transactions in which more than 50% of the voting power of
the Corporation is disposed of;
(F) enter into or repay any obligation or
indebtedness to any officer, director or employee of the Corporation, except
for obligations or indebtedness (i) incurred in the ordinary course of
business or (ii) the terms of which are no less favorable to the Corporation
than if such obligations or indebtedness had been the result of an arms
length negotiations with parties unrelated to the Corporation; or
(G) sell, encumber or otherwise dispose of any
of the Intellectual Property (as defined below) of the Corporation, other
than (i) licensing arrangements entered into in the ordinary course of
business or (ii) other dispositions in the ordinary course of business that
have been approved by the Board of Directors.
5. OPTIONAL CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time
to time, into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Stock Value for each class of
Preferred Stock, as applicable, by the Conversion Price (as defined below)
for such class, as applicable, in effect at the time of conversion. The
conversion price at which shares of Common Stock shall be deliverable upon
conversion of Preferred Stock without the payment of additional consideration
by the holder thereof (the "Conversion Price") shall initially be $7.84 for
the Class A Preferred Stock (the "Class A Conversion Price"), $8.795 for the
Class B Preferred Stock (the "Class B Conversion Price"), and $27.101 for the
Class C Preferred Stock (the "Class C Conversion Price"). Such initial
Conversion Price, and the rate at which shares of Preferred Stock may be
converted into shares of Common Stock, shall be subject to adjustment as
provided below.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be
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entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective conversion Price. Whether fractional shares are issuable
upon such conversion shall be determined on the basis of the total number of
shares of Preferred Stock the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.
(c) MECHANICS OF CONVERSION.
(i) In order for a holder of Preferred Stock to convert
shares of Preferred Stock into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Preferred Stock,
at the office of the transfer agent for the Preferred Stock (or at the
principal office of the Corporation if the Corporation serves as its own
transfer agent), together with written notice that such holder elects to
convert all or any number of the shares of the Preferred Stock represented by
such certificate or certificates. Such notice shall state such holder's name
or the names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
(the "Conversion Date"). The Corporation shall, as soon as practicable after
the Conversion Date, issue and deliver at such office to such holder of
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
Conversion Date, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such
date. If the conversion is in connection with an underwritten offer of
securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Preferred Stock for
Conversion, be conditioned upon the closing with the underwriter of the sale
of securities pursuant to such offering, in which event the person or persons
entitled to receive the Common Stock issuable upon such conversion of the
Preferred Stock shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
(ii) The Corporation shall at all times when the
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of
all outstanding Preferred Stock. Before taking any action which would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Common Stock issuable upon conversion of the Preferred Stock, the
Corporation will take any corporate action which may, at the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock at such adjusted
Conversion Price. If at any time the number of authorized but unissued shares
of Common Stock shall not
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be sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, in addition to such other remedies as shall be available to
the holder of such Preferred 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 purposes.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any accrued and unpaid dividends on the
Preferred Stock surrendered for conversion or on the Common Stock delivered
upon conversion.
(iv) All shares of Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be deemed
to be outstanding and all rights with respect to such shares, including the
rights, if any, to receive notices and to vote, shall immediately cease and
terminate on the Conversion Date, except only the right of the holders
thereof to receive shares of Common Stock in exchange therefor and payment of
any accrued and unpaid dividends thereon. Any shares of Preferred Stock so
converted shall be retired and canceled and shall not be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to reduce the authorized Preferred Stock accordingly.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Section
5(d), the following definitions shall apply:
(A) "Additional Shares of Common Stock" shall
mean all shares of Common Stock issued or deemed to be issued (pursuant to
Section 5(d)(iii) below) by the Corporation after the Original Issue Date,
other than Excluded Stock.
(B) "Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(C) "Employee Stock Options" shall mean stock or
options to purchase up to 400,000 shares of Common Stock to be granted to
employees, directors or consultants of the Corporation pursuant to any
Board-approved stock award, stock option plan, agreement or arrangement for
officers, directors, consultants, employees and others who render services to
the Corporation.
(D) "Excluded Stock" shall mean (I) Common Stock
issued or issuable (a) upon conversion of the Preferred Stock, (b) upon the
exercise of Employee Stock Options, (c) upon the exercise of the warrants
issued to each of Medtronic and Stephens and (d) in transactions referred to
in subsections (vi) and (vii) of this Section 5(d), (II) up to 953,876 shares
of Common Stock issued, or to be issued, to members of management and
employees of the Corporation who have executed or who agree to execute a
stock restriction agreement in a form acceptable to the Board of Directors of
the Corporation.
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(E) "Options" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding Employee Stock Options, as described below.
(F) "Original Issue Date" shall mean the date on
which a share of Preferred Stock was first issued.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment
in the number of shares of Common Stock into which the Preferred Stock is
convertible shall be made, by adjustment in the applicable Conversion Price
thereof: (a) unless the consideration per share (determined pursuant to
Section 5(d)(v)) for an Additional Share of Common Stock issued or deemed to
be issued by the Corporation is less than the applicable Conversion Price in
effect on the date of, and immediately prior to, the issue of such Additional
Shares, or (b) if prior to such issuance, the Corporation receives written
notice from the holders of at least 66 2/3% of each class of the then
outstanding shares of Preferred Stock, each voting separately as a class,
agreeing that no such adjustment shall be made as the result of the issuance
of Additional Shares of Common Stock.
(iii) ISSUE OF OPTIONS AND CONVERTIBLE SECURITIES
DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. If the Corporation at any
time or from time to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard
to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options, or in the case of
Convertible Securities and Options therefor, the Conversion or exchange of
such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date,
provided that Additional Shares of Common Stock shall not be deemed to have
been issued unless the consideration per share (determined pursuant to
Section 5(d)(v) hereof) of such Additional Shares of Common Stock would be
less than the applicable Conversion Price in effect on the date of and
immediately prior to such issue, on such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
(A) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities; and upon the expiration or
termination of any unexercised Option, the Conversion Price shall not be
readjusted, but the Additional Shares of Common Stock deemed issued as the
result of the original issue of such Option shall not be deemed issued for
the purposes of any subsequent adjustment of the Conversion Price; and
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase
in the consideration payable to the Corporation, or
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decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities; PROVIDED, HOWEVER,
that no readjustment pursuant to this clause (b) shall have the effect of
increasing the Conversion Price to an amount which exceeds the lower of (i)
the Conversion Price on the original adjustment date, or (ii) the Conversion
Price that would have resulted from any issuance of Additional Shares of
Common Stock between the original adjustment date and such readjustment date.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event the Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 5(d)(iii), without
consideration or for a consideration per share less than the Class A, Class B
or Class C Conversion Price, as the case may be, in effect on the date of and
immediately prior to such issue, then and in such event, such Class A, Class
B, or Class C Conversion Price, as the case may be, shall be reduced,
concurrently with such issue, to a price determined by multiplying such Class
A, Class B, or Class C Conversion Price, as the case may be, by a fraction,
the NUMERATOR of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of
Common Stock which the aggregate consideration received by the Corporation
for the total number of Additional Shares of Common Stock so issued would
purchase at such Class A, Class B, or Class C Conversion Price, as the case
may be, and the DENOMINATOR of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; PROVIDED, HOWEVER, that, for the
purpose of this Section 5(d)(iv), (I) all shares of Common Stock issuable
upon conversion of shares of Class A Preferred Stock, Class B Preferred
Stock, and Class C Preferred Stock outstanding immediately prior to such
issue shall be deemed to be outstanding, and (II) immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
5(d)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this Section 5(d), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:
(A) CASH AND PROPERTY. Such consideration shall:
(a) insofar as it consists of cash, be computed at the aggregate of cash
received by the Corporation, excluding amounts paid or payable for accrued
interest or accrued dividends; (b) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board of Directors; and (c) in the
event Additional Shares of Common Stock are issued together with other shares
or securities or other assets of the Corporation for consideration which
covers both, be the proportion of such consideration so received, computed as
provided in clauses (a) and (b) above, as determined in good faith by the
Board of Directors.
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(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 5(d)(iii),
relating to Options and Convertible Securities, shall be determined by
dividing:
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options
or Convertible Securities, plus the minimum aggregate amount of additional
consideration payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(y) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
In the case of such consideration or number of shares issuable as referred to
in clauses (x) and (y), respectively, the amounts shall be as set forth in
the instruments relating thereto without regard to any provision contained
therein for a subsequent adjustment of such consideration or number of
shares, respectively.
(vi) ADJUSTMENT FOR COMBINATIONS OR CONSOLIDATION OF
COMMON STOCK. If, at any time after the applicable Original Issue Date, the
number of shares of Common Stock outstanding are decreased by a combination
of the outstanding shares of Common Stock, following the record date fixed
for such combination (or the date of such combination, if no record date is
fixed), the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable upon conversion of each share of
Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares.
(vii) ADJUSTMENT FOR STOCK DIVIDENDS, SPLITS, ETC. If
the Corporation at any time after the applicable Original Issue Date fix a
record date for the subdivision, split-up or stock dividend of shares of
Common Stock, then, following the record date fixed for the determination of
holders of shares of Common Stock entitled to receive such subdivision,
split-up or dividend (or the date of such subdivision, split-up or dividend
if no record date is fixed), the Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable upon
conversion of each share of Preferred stock shall be increased in proportion
to such increase in outstanding shares; PROVIDED, HOWEVER, that the
Conversion Price shall not be decreased at such time if the amount of such
reduction would be an amount less than $.01, but any such amount shall be
carried forward and reduction with respect thereto made at the time of and
together with any subsequent reduction which, together with such amount and
any other amount or amounts so carried forward, shall aggregate $.01 or more.
(viii) ADJUSTMENT FOR MERGER OR REORGANIZATION, ETC.
In case of any recapitalization, consolidation or merger of the Corporation
with or into another corporation or the sale of substantially all of the
assets of the Corporation to another corporation (other than a subdivision or
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combination provided for elsewhere in this Section 5), each share of
Preferred Stock shall thereafter be convertible into type and amount 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 such Preferred Stock would have been entitled upon such
consolidation, merger or sale; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 5 set forth with respect to the
rights and interest thereafter of the holders of the Preferred Stock, to the
end that the provisions set forth in this Section 5 (including provisions
with respect to changes in and other adjustments of the Conversion Price)
shall thereafter be applicable, as nearly as reasonably may be, in relation
to any shares of stock or other property thereafter deliverable upon the
conversion of the Preferred Stock.
(e) NO IMPAIRMENT. 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 of these Articles of Incorporation to be
observed or performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all of 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
Preferred Stock against impairment.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section
5, the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder
of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to
such holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number
of shares of Common Stock and the amount, if any, of other property which
then would be received upon the conversion of Preferred Stock.
(g) NOTICE OF RECORD DATE. In the event:
(i) that the Corporation takes a record of the holders
of any class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend (other than a cash dividend) or
other distribution, any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class of any other securities or property, or to
receive any other right;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of
the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock
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distribution thereon), or of any consolidation or merger of the Corporation
into or with another corporation, or of the sale of all or substantially all
of the assets of the Corporation; or
(iv) of a Liquidation, then the Corporation shall cause
to be filed at its principal office or at the office of the transfer agent of
the Preferred Stock, and shall caused to be mailed to the holders of the
Preferred Stock at their last addresses as shown on the records of the
Corporation or such transfer agent, at least twenty (20) days before the
record date specified below, a notice stating:
(A) the record date of such dividend,
distribution, subdivision or combination or, if a record is not to be taken,
the date as of which the holders of the applicable class of securities of
record shall be entitled to such dividend, distribution, subdivision or
combination are to be determined, or
(B) the date on which such reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of the applicable class of securities of record shall be entitled to
exchange their shares of the applicable class of securities for securities or
other property deliverable upon such reclassification, consolidation, merger,
sale, dissolution or winding up.
6. AUTOMATIC CONVERSION.
(a) QUALIFIED OFFERING.
(i) CLASS A PREFERRED STOCK. Upon (i) the closing of a
Qualified Class A Offering (as defined below), or (ii) the affirmative vote
of the holders of 75% of the ten outstanding Class A Preferred Stock, all of
the then outstanding shares of Class A Preferred Stock shall automatically be
converted into shares of Common Stock at the Conversion Price at the time in
effect for such Preferred Stock, and any dividends accrued but unpaid shall
be immediately payable in cash. A "Qualified Class A Offering" shall mean an
Underwritten Offering (as defined below) by the Corporation of authorized but
unissued shares of Common Stock at a price per share which is not less than
200% of the Class A Stock Value and resulting in net proceeds to the
Corporation (after deducting underwriting commissions and offering expenses)
of not less than twenty million dollars $20,000,000.00 ("Qualified Net
Proceeds"). An "Underwritten Offering" shall mean a distribution of Common
Stock in a firm commitment underwritten public offering to the general public
pursuant to a registration statement filed with and declared effective by the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act.
(ii) CLASS B PREFERRED STOCK. Upon (i) the closing of a
Qualified Class B Offering (as defined below) or (ii) the affirmative vote of
the holders of 75% of the then outstanding Class B Preferred Stock, all of
the then outstanding shares of Class B Preferred Stock shall automatically be
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converted into shares of Common Stock at the Conversion Price at the time in
effect for such Preferred Stock, and any dividends accrued but unpaid shall
be immediately payable in cash. A "Qualified Class B Offering" shall mean an
Underwritten Offering (as defined below) by the Corporation of authorized but
unissued shares of Common Stock at a price per share which is not less than
200% of the Class B Stock Value and resulting in Qualified Net Proceeds.
(iii) CLASS C PREFERRED STOCK. Upon (i) the closing of a
Qualified Class C Offering (as defined below) or (ii) the affirmative vote of
the holders of 75% of the then outstanding Class C Preferred Stock, all of
the then outstanding shares of Class C Preferred Stock shall automatically be
converted into shares of Common Stock at the Conversion Price at the time in
effect for such Preferred Stock, and any dividends accrued but unpaid shall
be immediately payable in cash. A "Qualified Class C Offering" shall mean an
Underwritten Offering by the Corporation of authorized but unissued shares of
Common Stock at a price per share which is not less than 200% of the Class C
Stock Value and resulting in Qualified Net Proceeds.
(b) NOTICES. The Corporation shall promptly send by
first-class mail, postage prepaid, to each holder of Preferred Stock at such
holder's address appearing on the Corporation's records a copy of (i) each
registration statement filed by the Corporation under the Securities Act and
each amendment thereof and exhibit and schedule thereto and (ii) each order
of the Securities and Exchange Commission declaring any such registration
statement to be effective.
(c) NO FURTHER ACTION. In the case of an automatic conversion
pursuant to this Section 6, the outstanding shares of Preferred Stock shall
be converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or to its transfer agent; PROVIDED, HOWEVER,
that the Corporation shall not be obligated to issue to any holder
certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Preferred Stock are
delivered either to the Corporation or to any transfer agent of the
Corporation.
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed hereto and this Certificate to be signed by its Chief Executive
Officer this 3rd day of August, 2000.
REGENERATION TECHNOLOGIES, INC.
By: /s/ JAMES M. GROOMS
------------------------------------
Chief Executive Officer
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