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EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
RIGHTNOW TECHNOLOGIES, INC.
To form a corporation pursuant to the Delaware General Corporation Law
("DGCL"), the undersigned hereby certifies:
ARTICLE I
The name of the corporation is RightNow Technologies, Inc.
ARTICLE II
The address of the corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of
New Castle, Delaware 19801. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may now or hereafter be organized under the DGCL, as
amended from time to time.
ARTICLE IV
The total number of shares of capital stock the corporation is authorized
to issue is 165,000,000 shares, consisting of 150,000,000 shares of common
stock, par value $.001 per share (the "Common Stock"), and 15,000,000 shares of
preferred stock, par value $.001 per share (the "Preferred Stock"), of which
5,554,853 shares are designated Series A Preferred Stock (the "Series A
Preferred").
A. All shares of Common Stock shall be identical and shall entitle the
holders thereof to the same rights and privileges. When and as dividends are
declared on the Common Stock, whether payable in cash, in property or in
securities of the corporation, the holders of the Common Stock shall be entitled
to share equally, share for share, in such dividends. Upon any liquidation,
dissolution or winding up of the corporation, whether voluntary or involuntary,
after the payment in full of all amounts to which the holders of the Preferred
Stock shall be entitled, the remaining assets of the corporation to be
distributed to the holders of the stock of the corporation shall be distributed
ratably among the holders of the shares of Common Stock. Except as otherwise
provided in this Certificate of Incorporation, the holders of shares of the
Common Stock shall be entitled to vote on all matters to be voted on by the
stockholders of the corporation and shall be entitled to one vote for each share
thereof held of record. Without the affirmative vote of the holders of record of
66 2/3% of all of the shares of the Common Stock outstanding, the corporation
shall not alter, amend or repeal Article V or VI of this Certificate of
Incorporation or the provisions of Article IV providing for undesignated
Preferred Stock.
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The holders of Common Stock shall have no preemptive rights to subscribe to any
or all additional issues of Common Stock or any securities of the corporation
convertible into Common Stock.
B. The Preferred Stock may be issued from time to time by the board of
directors as shares of one or more series. Subject to the provisions hereof and
the limitations prescribed by law, the board of directors is expressly
authorized, by adopting resolutions providing for the issuance of shares of any
particular series and, if and to the extent from time to time required by law,
by filing with the Delaware Secretary of State a certificate setting forth the
resolutions so adopted pursuant to the DGCL, to establish the number of shares
to be included in each such series and to fix the designation and relative
powers, including voting powers, preferences, rights, qualifications and
limitations and restrictions thereof, relating to the shares of each such
series. The authority of the board of directors with respect to each series
shall include, but not be limited to, determination of the following:
(i) the distinctive serial designation of such series and the
number of shares constituting such series;
(ii) the annual dividend rate on shares of such series, if any,
whether dividends shall be cumulative and, if so, from which date or dates;
(iii) whether the shares of such series shall be redeemable and, if
so, the terms and conditions of such redemption, including the date or
dates upon and after which such shares shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(iv) the obligation, if any, of the corporation to retire shares of
such series pursuant to a sinking fund;
(v) whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or classes and, if so,
the terms and conditions of such conversion or exchange, including the
price or prices or the rate or rates of conversion or exchange and the
terms of adjustment, if any;
(vi) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of
such voting rights;
(vii) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding-up of the
corporation; and
(viii) any other relative rights, powers, preferences,
qualifications, limitations or restrictions thereof relating to such
series.
The shares of Preferred Stock of any one series shall be identical with each
other in all respects except as to the dates from and after which dividends
thereon shall cumulate, if cumulative.
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C. The powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, in respect to the Series A Preferred shall
be as follows:
1. Dividend Rights. The holders of the Series A Preferred shall be
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entitled to receive, when, as and if declared by the Board of Directors of the
corporation, out of funds legally available therefor, dividends in an amount
equal to $0.26 per annum for each share of Series A Preferred held by them,
prior and in preference to payment of any dividend (other than dividends payable
solely in Common Stock of the corporation) with respect to the Common Stock.
The right to dividends on shares of Series A Preferred under this Section 1
shall not be cumulative, and no right shall accrue to the holders of the Series
A Preferred under this Section 1 by reason of the fact that dividends on such
shares are not declared in any period.
2. Liquidation Rights. In the event of any liquidation, dissolution, or
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winding up of the corporation, either voluntary or involuntary, distributions to
the shareholders of the corporation shall be made in the following manner:
(a) Preference. The holders of each share of Series A Preferred then
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outstanding shall be entitled to be paid, out of the assets and funds of the
corporation legally available therefor, prior and in preference to any payment
or distribution (or any setting apart of any payment or distribution) on any
shares of Common Stock, an amount per share equal to $2.91 (as adjusted for
stock dividends, stock splits and the like) with respect to the Series A
Preferred plus all declared but unpaid dividends on the Series A Preferred. If
upon any liquidation, dissolution or winding up of the corporation, the assets
and funds of the corporation shall be insufficient to permit the payment to
holders of the Series A Preferred of their full preferential amount described in
this Section 2(A), then all of the remaining assets and funds of the corporation
legally available for distribution shall be distributed among the holders of the
then outstanding Series A Preferred pro rata, in proportion to the full amount
each such holder is otherwise entitled to receive.
(b) Remaining Assets. If there are any assets and funds of the corporation
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remaining after the payment or distribution (or the setting aside for payment or
distribution) to the holders of the Series A Preferred of their full
preferential amounts described in this Section 2, then all such remaining assets
and funds of the corporation legally available for distribution shall be
distributed among the holders of the then outstanding Common Stock pro rata
according to the number of shares of Common Stock held by such holders.
(c) Events Deemed a Liquidation. For purposes of this subsection ii, a
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merger or consolidation of the corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
corporation, in which consolidation or merger the shareholders of the
corporation receive distributions in cash or securities of another corporation
or corporations as a result of such consolidation or merger, or a sale of all or
substantially all of the assets of the corporation, shall be treated as a
liquidation, dissolution or winding up of the corporation, unless the
shareholders of this corporation receive in such consolidation, merger or sale
of assets more than fifty percent (50%) of the voting equity securities of the
successor or surviving corporation.
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3. Voting Rights.
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(a) Except as required by law or pursuant to Section 3(b) below or Section
6 hereof, the holders of Series A Preferred and the holders of Common Stock
shall be entitled to notice of any shareholders' meeting and to vote together as
a single class upon any matter submitted to the shareholders for a vote as
follows: (i) the holders of the Series A Preferred shall have one (1) vote for
each full share of Common Stock into which their respective shares of Series A
Preferred are convertible on the record date for the vote and (ii) the holders
of Common Stock shall have one (1) vote per share of Common Stock.
(b) Notwithstanding Section 3(a) above, (i) the holders of the Series A
Preferred voting as a separate class in the manner provided in subparagraph
(a)(i) above, shall be entitled to elect one (1) member of the corporation's
Board of Directors at each meeting or pursuant to each consent of the
corporation's shareholders for the election of directors, and to remove from
office such director and to fill any vacancy caused by the resignation, death or
removal of such director; (ii) the holders of Common Stock and Series A
Preferred, voting together as a class, shall be entitled to elect all remaining
members of the Board of Directors.
4. Redemption.
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(a) Mandatory Redemption of Series A Preferred. Subject to the terms and
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conditions of this Section 4, to the extent that any outstanding shares of the
Series A Preferred have not previously been redeemed or converted into Common
Stock, in the event that the corporation shall receive a written request by the
holders of at least two-thirds (2/3) of the then outstanding shares of Series A
Preferred (the "Election") at least thirty (30) days prior to the applicable
Redemption Date (as defined below), for the redemption of all the Series A
Preferred under this subsection 4(a), the corporation shall redeem on the date
which is the fifth, sixth and seventh anniversary date of the Original Issue
Date (as defined below) (each a "Redemption Date"), a number of shares of Series
A Preferred equal to one-third of the remaining outstanding shares of Series A
Preferred that are outstanding on each of those respective dates (except as
provided below). Such shares are to be redeemed from any source of funds
legally available therefor at the redemption price therefor described in this
subsection. The redemption price for each share of Series A Preferred shall be
the sum of (i) $2.91 per share of Series A Preferred (as originally issued and
appropriately adjusted for stock splits and the like with regard to such shares)
plus (ii) all declared but unpaid dividends thereon, if any, through the
applicable Redemption Date. If upon any Redemption Date scheduled under this
subsection for the redemption of Series A Preferred, the funds and assets of the
corporation legally available to redeem such stock shall be insufficient to
redeem all shares of Series A Preferred then scheduled to be redeemed, then any
such unredeemed shares shall be carried forward and shall be redeemed (together
with any other shares of Series A Preferred then scheduled to be redeemed) at
the next such scheduled Redemption Date to the full extent of legally available
funds of the corporation at such time, and any such unredeemed shares shall
continue to be so carried forward until redeemed. Shares of Series A Preferred
which are subject to redemption but which have not been redeemed due to
insufficient legally available funds and assets of the corporation shall
continue to be outstanding and entitled to all dividend, liquidation, conversion
and other rights, preferences, privileges and restrictions of the Series A
Preferred until such shares have been
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converted or redeemed.
(b) Partial Redemption. No redemption shall be made under this Section 4
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of only a part of the then outstanding Series A Preferred unless the corporation
shall effect such redemption pro rata among all holders of the then outstanding
Series A Preferred based upon the aggregate redemption price of all shares of
Series A Preferred held by each holder thereof on the applicable Redemption
Date.
(c) Redemption Notice. At least twenty (20) days prior to any Redemption
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Date and after receipt by the corporation of the notice from the holders as
provided for in Section 4(a), written notice shall be mailed by the corporation,
postage prepaid, to each holder of record (at the close of business on the
business day preceding the day which notice is given) of the Series A Preferred
to be redeemed, at the address last shown on the records of the corporation for
such holder or given by the holder to the corporation for the purpose of notice
or, if no such address appears or is given, at the place where the principal
executive office of the corporation is located, notifying such holder of the
redemption to be effected, specifying the subsection hereof under which such
redemption is being effected, the Redemption Date, the applicable redemption
price, the number of such holder's shares of Series A Preferred to be redeemed
and the place at which payment may be obtained and calling upon such holder to
surrender to the corporation, in the manner and at the place designated, the
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice").
(d) Surrender of Certificates. On or before each designated Redemption
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Date, each holder of Series A Preferred to be redeemed shall (unless such holder
has previously exercised his or her right to convert such shares of Series A
Preferred into Common Stock as provided in Section 5 below), surrender the
certificate(s) representing such shares of Series A Preferred to be redeemed to
the corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the applicable redemption price for such shares shall be
payable to the order of the person whose name appears on such certificate(s) as
the owner thereof, and each surrendered certificate shall be canceled and
retired. If less than all of the shares represented by such certificate are
redeemed, then the corporation shall promptly issue a new certificate
representing the unredeemed shares.
(e) Effect of Redemption. From and after the Redemption Date, unless there
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shall have been a default in payment of the redemption price, then
notwithstanding that the certificates evidencing any of the shares of Series A
Preferred so called for redemption shall not have been surrendered, the shares
shall be deemed to be no longer outstanding, and the holders thereof shall cease
to be shareholders with respect to such shares and shall have no rights with
respect thereto, except only the right of the holders to receive the applicable
redemption price without interest upon surrender of their certificate(s)
therefor.
(f) Deposit of Redemption Price. On or prior to a Redemption Date, the
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corporation may, at its option, deposit with a bank or trust company having a
capital and surplus of at least $50,000,000, as a trust fund, a sum equal to the
aggregate applicable redemption price for all shares of Series A Preferred to be
redeemed on such Redemption Date but not yet redeemed, with irrevocable
instructions and authority to the bank or trust company to pay, on or after the
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Redemption Date, the applicable redemption price to the holders of all shares of
Series A Preferred called for redemption on that Redemption Date upon the
surrender of their share certificate duly endorsed for transfer in accordance
with the standard practice of such bank or trust company. From and after the
date of such deposit, the shares so called for redemption shall be redeemed on
the Redemption Date. The deposit shall constitute full payment for the shares
to their holders, and on the Redemption Date, the shares shall be deemed to be
no longer outstanding, and the holders thereof shall cease to be shareholders
with respect to such shares and shall have no rights with respect thereto except
the right to receive from the bank or trust company payment of the redemption
price of the shares, without interest, upon surrender of their certificates.
Any funds so deposited and unclaimed at the end of one (1) year after such
Redemption Date shall be released or repaid to the corporation, after which time
the holders of shares called for redemption who have not claimed such funds
shall be entitled to receive payment of the redemption price only from the
corporation.
5. Conversion. The holders of the Series A Preferred shall have
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conversion rights as follows:
(a) Right to Convert. Each holder of Series A Preferred may, at any time,
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convert any or all of such Series A Preferred into fully-paid and nonassessable
shares of Common Stock at the applicable conversion price (the "Conversion
Price"). Each share of Series A Preferred shall be convertible into the number
of shares of Common Stock that results from dividing $2.91 by the Conversion
Price in effect at the time of conversion. The Conversion Price of the Series A
Preferred shall initially be $2.91 per share of Common Stock. Such initial
Conversion Price shall be subject to adjustment from time to time in certain
instances as set forth in Section 5(d).
(b) Automatic Conversion. Each share of Series A Preferred shall
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automatically be converted into Common Stock of the corporation at the then
effective Conversion Price (i) in the event that the holders of at least a
majority of the outstanding Series A Preferred consent to such conversion or
(ii) upon the closing of an underwritten public offering pursuant to an
effective registration statement pursuant to which Common Stock is sold to the
public by the corporation in a public offering registered under the Securities
Act of 1933, as amended (the "Securities Act"), at a per share public offering
price of not less than $8.73 (appropriately adjusted for stock dividends, stock
splits and the like) and with aggregate offering proceeds to the corporation of
at least $10,000,000 (a "Qualified IPO").
(c) Mechanics of Conversion. Before any holder of Series A Preferred shall
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be entitled to convert the same into Common Stock, such holder shall surrender
the certificate or certificates therefor, duly endorsed, to the office of the
corporation or any transfer agent for such Series A Preferred and shall give
written notice to the corporation at such office that such holder elects to
convert the same and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be issued;
provided, however, that in the event of an automatic conversion pursuant to
Section 5(b) hereof, the outstanding shares of Series A Preferred 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 its transfer agent; and provided further that the corporation
shall not be obligated
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to issue certificates evidencing the shares of Common Stock issuable upon such
automatic conversion unless and until the certificates evidencing such shares of
Series A Preferred are either delivered to the corporation or its transfer agent
as provided above, or the holder notifies the corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the corporation to indemnify the corporation from any
loss incurred in connection with such certificates. The corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder
of Series A Preferred, or to the nominee or nominees of such holder, a
certificate or certificates for the number of full shares of Common Stock to
which such holder shall be entitled, together with cash in lieu of any fraction
of a share as hereinafter provided, and, if less than all of the shares of
Series A Preferred represented by such certificate are converted, a certificate
representing the shares of Series A Preferred not converted. Such conversion
shall be deemed to have been made as of the date of such surrender of the
certificate for the Series A Preferred to be converted, and the person or
persons entitled to receive the Common Stock issuable upon such conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
on such date and shall have no further rights as holders of Series A Preferred
as of such date. If the conversion is in connection with an offer of securities
registered pursuant to the Securities Act, the conversion may, at the option of
any holder tendering Series A Preferred for conversion, be conditioned upon the
closing of the sale of securities pursuant to such offering, in which event the
person(s) entitled to receive the Common Stock issuable upon such conversion of
the Series A Preferred shall not be deemed to have converted such Series A
Preferred until immediately prior to the closing of such sale of securities.
(d) Adjustments to Conversion Price.
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(i) Special Definitions. For purposes of this Section 5(d), the
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following definitions shall apply:
(1) "Options" shall mean any rights, warrants or options to
subscribe for, purchase or otherwise acquire or receive Common Stock or
Convertible Securities.
(2) "Conversion Price" shall mean the price, determined pursuant
to this Section 5, at which shares of Common Stock shall be deliverable
upon conversion of the Series A Preferred.
(3) "Convertible Securities" shall mean any indebtedness or shares
of stock convertible into or exchangeable for Common Stock, including the
Series A Preferred (other than Options).
(4) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued (or, pursuant to Section 5(d)(iii), deemed to be
issued) by the corporation after the first date on which the corporation
issues any shares of Series A Preferred (the "Original Issue Date"), other
than shares of Common Stock issued (or, pursuant to Section 5(d)(iii),
deemed to be issued) or issuable at any time:
(A) upon conversion of the Series A Preferred into Common
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Stock;
(B) to officers, directors, or employees of, and consultants to,
the corporation pursuant to plans, arrangements or agreements approved
by the Board of Directors;
(C) as a dividend or distribution on the Series A Preferred;
(D) in connection with an equipment financing or leasing
arrangement or loan arrangement or in connection with a strategic
partnering transaction approved by the Board of Directors of the
corporation;
(E) by way of dividend or other distribution on shares of Common
Stock excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses (A), (B), (C), (D) or this clause (E)
or on shares of Common Stock so excluded; or
(F) in connection with a Qualified IPO.
(ii) No Adjustment of Conversion Price. No adjustment in the
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Conversion Price of the Series A Preferred shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per share
for an Additional Share of Common Stock issued or deemed to be issued by the
corporation is less than the Conversion Price in effect on the date of, and
immediately prior to, such issue, for such share of Series A Preferred.
(iii) Deemed Issue of Additional Shares of Common Stock. In the event
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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 (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, 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 in any such case in
which Additional Shares of Common Stock are deemed to be issued:
(1) except as provided in Section 5(d)(iii)(2), 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
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the corporation, or change in the number of shares
of Common Stock issuable, upon the exercise, conversion or exchange thereof
(other than under or by reason of provisions
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designed to protect against dilution), 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;
(3) upon the expiration or termination of any such Options or
any rights of conversion or exchange under such Convertible Securities
which shall not have been exercised, 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
such expiration or termination, be recomputed as if:
(A) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common Stock issued were
shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the corporation for the issue of
all such Options, whether or not exercised, plus the consideration
actually received by the corporation upon such exercise, or for the
issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually
received by the corporation upon such conversion or exchange, and
(B) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of
Common Stock deemed to have been then issued was the consideration
actually received by the corporation for the issue of all such
Options, whether or not exercised, plus the actual consideration
received by the corporation upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
and
(4) no readjustment pursuant to clause (2) or (3) above shall have the
effect of increasing the Conversion Price to an amount which exceeds the
lower of (i) the Conversion Price on the Original Issue Date or (ii) such
lower Conversion Price as would have resulted from any issuance of
Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section (d)(iii)) between the
Original Issue Date and such readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares
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of Common Stock. In the event the corporation at any time after the Original
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Issue Date 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 Conversion
Price of the Series A Preferred in effect on the date of and immediately prior
to such issue, then and in each such event the Conversion Price of the Series A
Preferred shall be
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reduced to a price (calculated to the nearest tenth of a cent) determined by
multiplying such Conversion Price 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 Conversion Price; 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 that, for the purposes of this Section 5(d)(iv), all shares of
Common Stock issuable upon conversion of all outstanding Series A Preferred and
upon exercise or conversion of all outstanding Options and Convertible
Securities 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:
(1) Cash and Property. Such consideration shall:
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(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the corporation;
(B) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as
determined by the Board in the good faith exercise of its reasonable
business judgment; 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 by the Board in the good faith exercise
of its reasonable business judgment.
(2) 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:
(A) 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 (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a
subsequent adjustment of such 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
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(B) the maximum number of shares of Common Stock (as set
forth in the instrument relating thereto, without regard to any
provisions contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or the conversion
or exchange of such Convertible Securities or the exercise of such
Options for Convertible Securities.
(vi) Other Adjustments to Conversion Price.
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(1) Stock Splits, Dividends, Distributions and Combinations. In
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the event the corporation should at any time or from time to time after the
Original Issue Date fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination
of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock, Options or
Convertible Securities, then, following such record date (or the date of
such dividend, distribution, split or subdivision if no record date is
fixed), the Conversion Prices for the Series A Preferred shall be
appropriately decreased so that the number of shares of Common Stock
issuable on conversion of each share of Series A Preferred shall be
increased in proportion to such increase in the number of outstanding
shares of Common Stock. If the number of shares of Common Stock
outstanding at any time after the Original Issue Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Prices for the Series A
Preferred shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of Series A Preferred
shall be decreased in proportion to such decrease in the number of
outstanding shares of Common Stock.
(2) Other Distributions. In the event the corporation shall
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declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the corporation or other persons, or assets
(excluding cash dividends) then, in each such case for the purpose of this
Section 5(d)(vi)(2), the holders of the Series A Preferred shall be
entitled to a proportionate share of any such distribution as though they
were the holders of the number of shares of Common Stock of the corporation
into which their shares of Series A Preferred are convertible as of the
record date fixed for the determination of the holders of Common Stock of
the corporation entitled to receive such distribution.
(3) Recapitalizations. If at any time or from time to time there
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shall be a recapitalization of the Common Stock (other than an event
provided for in Section 2 or elsewhere in Section 5(d) hereof), provision
shall be made so that the holders of Series A Preferred shall thereafter be
entitled to receive upon conversion of shares of the Series A Preferred the
number of shares of stock or other securities or property of the
corporation or otherwise, to which a holder of the Common Stock deliverable
upon conversion of such Series A Preferred would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Section 5 with respect to the
rights of the holders of Series A Preferred after the recapitalization to
the end that the provisions of this Section 5 (including adjustment of
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the Conversion Price then in effect and the number of shares purchasable
upon conversion of shares of Series A Preferred) shall be applicable after
that event as nearly equivalent as may be practicable.
(e) Certificate as to Adjustments. Upon the occurrence of each adjustment
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or readjustment of the Conversion Price of the Series A Preferred pursuant to
this Section 5, the corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon the written
request at any time of any holder of Series A Preferred, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price of the Series A Preferred at the
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of the Series A Preferred.
(f) No Impairment. The corporation will not, without the consent of the
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holders of then outstanding Series A Preferred as required under Section 6
below, by amendment of its Articles of Incorporation or through any
reorganization, recapitalization, 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 Section 5 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 Series A Preferred against
impairment.
(g) No Fractional Shares. No fractional shares shall be issued upon the
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conversion of shares of Series A Preferred into Common Stock and if the
conversion would result in the issuance of a fraction of a share of Common
Stock, the corporation shall, in lieu of such fractional share, pay the holder a
sum in cash equal to the fair market value of such fraction on the date of
conversion (as determined by the Board of Directors of the corporation).
(h) Reservation of Stock Issuable Upon Conversion. The corporation shall
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at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series A Preferred, in addition
to such other remedies as shall be available to the holder of the Series A
Preferred 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,
including, without limitation, engaging in reasonable best efforts to obtain the
requisite shareholder approval of any necessary amendment to these articles.
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6. Protective Provisions. In addition to any other rights provided by
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law and except as otherwise provided herein, so long as any shares of Series A
Preferred shall be outstanding, the corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of at least a
majority of the outstanding shares of the Series A Preferred, voting together as
a single class:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Articles of Incorporation or Bylaws if such action would
materially and adversely alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Series A
Preferred;
(b) authorize or issue shares of any class or series of stock having a
preference senior to or on a parity with the Series A Preferred as to dividend
rights or liquidation preferences;
(c) pay or declare any dividend or other distribution with respect to
Common Stock (other than a dividend payable in shares of Common Stock or a
dividend payable to holders of Common Stock solely as a result of the
corporation's status as an S corporation); or
(d) effect any sale, lease, assignment, transfer or other conveyance (other
than the grant of a mortgage or security interest in connection with the
indebtedness for borrowed money from banks and other non-affiliated financial
institutions) of all or substantially all the assets of the corporation or any
of its subsidiaries, or merge into or with or consolidate with any other
corporation (other than a merger or consolidation with a wholly-owned subsidiary
or which would result in the voting securities of the corporation outstanding
immediately prior thereto continuing to represent fifty percent (50%) or more of
the voting securities of the corporation immediately thereafter).
7. Notices. Any notice required by the provisions hereunder to be given
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to the holders of shares of Series A Preferred shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the corporation.
ARTICLE V
The number of directors to constitute the whole board of directors shall be
such number (not less than three nor more than nine) as shall be fixed from time
to time by resolution of the board of directors adopted by such vote as may be
required in the bylaws. The board of directors shall be divided into three
classes as nearly equal in number as may be, with the term of office of one
class expiring each year. The directors of the first class shall be elected to
hold office for a term expiring at the annual meeting of stockholders in 2001,
directors of the second class shall be elected to hold office for a term
expiring at the next succeeding annual meeting in 2002, and directors of the
third class shall be elected to hold office for a term expiring at the second
succeeding annual meeting in 2003. Commencing in 2001, at each annual meeting
of stockholders, successors to the directors whose terms shall then expire shall
be elected to hold office for terms expiring at the third succeeding annual
meeting of stockholders. In case of any vacancies, by reason of an increase in
the number of directors or otherwise, each additional
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director may be elected by a majority of the directors then in office, even
though less than a quorum of the board of directors, to serve until the end of
the term he is elected to fill and until his successor shall have been elected
and qualified in the class to which such director is assigned and for the term
or remainder of the term of such class. Directors shall continue in office until
others are chosen and qualified in their stead. When the number of directors is
changed, any newly created directorships or any decrease in directorships shall
be so assigned among the classes by a majority of the directors then in office,
though less than a quorum, as to make all classes as nearly equal in number as
may be feasible. No decrease in the number of directors shall shorten the term
of any incumbent director.
ARTICLE VI
At any time prior to the date on which the Common Stock of the corporation
becomes registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any action that is required or permitted to be taken at any
annual or special meeting of stockholders of the corporation may be taken
without a meeting in accordance with Section 228 of the DGCL. On or after the
date on which the Common Stock becomes registered under the Exchange Act, all
actions required or permitted to be taken by the stockholders of the corporation
must be effected at a duly called annual or special meeting of stockholders of
the corporation and may not be effected by any consent in writing of such
stockholders.
ARTICLE VII
In furtherance and not in limitation of the power conferred upon the board
of directors by law, the board of directors shall have power to adopt, amend,
alter and repeal from time to time the bylaws of the corporation by majority
vote of all directors except that any provision of the bylaws requiring, for
board action, a vote of greater than a majority of the board shall not be
amended, altered or repealed except by such supermajority vote.
ARTICLE VIII
The corporation reserves the right to amend this Certificate of
Incorporation in any manner provided herein or permitted by the DGCL, and all
rights and powers, if any, conferred herein on stockholders, directors and
officers are subject to this reserved power.
ARTICLE IX
A director of the corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of the law, (iii)
under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. If the DGCL is amended hereafter
to further eliminate or limit the liability of a director of a corporation, then
a director of the corporation, in addition to the circumstances set forth
herein, shall have no liability as a director (or such liability shall be
limited) to the fullest extent permitted by the DGCL as so amended.
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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 or administrative or investigative, by reason of the fact that
he, his 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 corporation, partnership, joint venture, trust or other enterprise as a
director, officer, employee or agent at the request of the corporation or any
predecessor to the corporation.
No repeal or modification of the foregoing provisions of this Article IX
nor, to the fullest extent permitted by law, any modification of law, shall
adversely affect any right or protection of a director of the corporation
existing at the time of such repeal or modification.
ARTICLE X
The name and mailing address of the incorporator is Sara Gross Methner,
Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402.
Dated: July 12, 2000
/s/ Sara Gross Methner
__________________________________
Sara Gross Methner, Incorporator
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