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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IPG PHOTONICS CORPORATION
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Pursuant to Sections 242 and 245 of the
General Corporation Law of the State of Delaware
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The undersigned, IPG Photonics Corporation (the "Corporation"), a
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corporation existing under the laws of the State of Delaware, hereby certifies
as follows:
1. The name of the Corporation is IPG PHOTONICS CORPORATION.
2. The original Certificate of Incorporation of the Corporation was filed
with the Secretary of State of the State of Delaware on December 2, 1998 and a
Certificate of Amendment was filed on March 30, 2000.
3. The Amended and Restated Certificate of Incorporation as hereinafter set
forth has been duly adopted in accordance with the provisions of Sections 242
and 245 of the General Corporation Law of the State of Delaware.
4. The text of the Certificate of Incorporation is amended and restated in
full to read as follows:
FIRST: The name of the corporation (the "Corporation") is "IPG Photonics
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Corporation."
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, Wilmington, Delaware, County of New
Castle, and the name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The purpose for which the Corporation is organized is to engage in
any lawful act or activity for which corporation may be organized under the
General Corporation Law of the State of Delaware.
FOURTH: Total number of shares of capital stock which the Corporation shall
have authority to issue is 55,000,000 shares of which 50,000,000 shares shall be
designated Common Stock, par value of $.0001 per share ("Common Stock"), and
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5,000,000 shares shall be designated Preferred Stock, par value of $.0001 per
share ("Preferred Stock").
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The Board of Directors is authorized, subject to limitations prescribed by
law and the terms of this Certificate, to provide for the issuance of shares of
Preferred Stock in one or more series, to establish the number of shares to be
included in each such series, and to fix the
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designations, powers, preferences, and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof.
A. Series A Preferred Stock.
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Any capitalized terms not otherwise defined in this Section A are
defined in Section A.7.1 hereof.
Section 1. Designation and Amount
1.1 There shall be a series of the Preferred Stock which shall be
designated as the "Series A Preferred Stock," par value $.0001 per share, and
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the number of shares constituting such series shall be Five Hundred Thousand
(500,000). Subject to Section A.5.3, such number of shares may be decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation with respect to shares of Series A
Preferred Stock.
1.2 The Corporation shall not reissue any shares of the Series A
Preferred Stock and shall from time to time in accordance with applicable law
increase the authorized amount of its Common Stock in the event that the number
of authorized shares of Common Stock remaining available for issuance shall not
be sufficient to permit conversion of the Series A Preferred Stock.
Section 2. Dividends and Distributions. If any cash dividends or
non-cash dividends or other distributions (other than distributions of Common
Stock) are declared by the Board of Directors to be paid on any shares of Common
Stock, then a dividend shall be paid at the same time to the holders of the
outstanding shares of the Series A Preferred Stock at a rate per share equal to
the product of (i) such per share dividend or other distribution declared by the
Board of Directors on the Common Stock multiplied by (ii) the Conversion Ratio
(as defined in Section A.5.3 below) then in effect.
Section 3. Liquidation. Upon any liquidation, dissolution or winding
up of the Corporation, or upon any Liquidating Merger, each holder of shares of
Series A Preferred Stock shall be entitled to be paid, before any distribution
or payment is made upon any Common Stock, from the assets of the Corporation
available for distribution to its Stockholders, whether from capital, surplus or
earnings, an amount in cash equal to the sum of the aggregate Liquidation Value
of all shares of Series A Preferred Stock held by such holder. Prior to the
liquidation, dissolution or winding up of the Corporation or to any Liquidating
Merger, the Corporation shall declare for payment all accrued and unpaid
dividends, if any, with respect to the Series A Preferred Stock as set forth in
Section A.2. If upon any such liquidation, dissolution or winding up of the
Corporation or any such Liquidating Merger, the Corporation's assets to be
distributed among the holders of the Series A Preferred Stock are insufficient
to permit payment to such holders of the aggregate amount that they are entitled
to be paid, then the entire assets to be distributed shall be distributed
ratably among such holders based upon the aggregate Liquidation Value of the
Series A Preferred Stock held by each such holder. The Corporation shall give
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written notice of such liquidation, dissolution or winding up or of such
Liquidating Merger, not less than 30 days prior to the payment date stated
therein, to each record holder of shares of Series A Preferred Stock. Neither
the consolidation or merger of the Corporation into or with any other entity or
entities that is a wholly-owned subsidiary of the Corporation, nor the sale or
transfer by the Corporation of all or any part of its assets to any such
wholly-owned subsidiary, nor the reduction of the capital stock of the
Corporation, shall be deemed to be a liquidation, dissolution winding up or
Liquidating Merger of the Corporation within the meaning of this Section 3.
After distribution of the holders of Series A Preferred Stock of the full
preferential amount set forth above, the remaining assets of the Corporation
available for distribution, if any, to the stockholders of the Corporation shall
be distributed to the holders of shares of Common Stock pro rata based on their
respective shareholdings on a fully diluted basis.
Section 4. Voting Rights. The holders of the Series A Preferred Stock,
voting as a class, shall be entitled to vote as provided by applicable law and
as herein provided.
4.1 Protective Voting Provisions. So long as shares of the Series A
Preferred Stock shall be outstanding, without first obtaining the approval (by
vote or written consent, as provided by law or by the Certificate of
Incorporation or the bylaws of the Corporation, each as amended from time to
time) of the holders of more than fifty percent of the outstanding shares of
Series A Preferred Stock, voting separately as a class, the Corporation shall
not:
(i) increase the authorized number of shares of Series A Preferred Stock;
or
(ii) affect, alter, amend, repeal or waive the rights, preferences or
privileges of the holders of the Series A Preferred Stock as set forth herein.
4.2 Other Voting Provisions. The holders of the Series A Preferred
Stock shall not be entitled to vote on any matter on which the holders of Common
Stock shall be entitled to vote (including the election of directors), except as
otherwise required by law.
Section 5 Conversion.
5.1 Elective Conversion. At any time after March 30, 2002, at his, her
or its absolute and sole discretion, any holder of shares of Series A Preferred
Stock may convert all or any portion of the Series A Preferred Stock (including
any fraction of a share) held by such holder, into a number of fully paid and
nonassessable shares of Conversion Stock equal to the Conversion Ratio then in
effect by delivery to the Corporation of a number of shares of Series A
Preferred Stock having a value equal to the Conversion Price to be converted,
and by surrendering such holder's certificate(s) in accordance with Section
A.5.6 hereof, and subject to Section A.5.7 hereof.
5.2 Automatic Conversion. Immediately following the closing of (i) a
Qualified IPO or (ii) the consummation of any merger or sale of a majority of
the Common Stock of the Corporation or of all or substantially all of its assets
(other than a merger with or sale to an Affiliate of the Corporation) in which
the holders of the Common Stock (assuming
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conversion of all convertible securities of the Corporation) would be entitled
to receive in a liquidation consideration worth at least $500,000,000, then any
and all outstanding shares of Series A Preferred Stock shall automatically
convert to Conversion Stock at the then effective Conversion Ratio without any
further action on the part of any holder of the Series A Preferred Stock,
subject to Sections A.5.8 and Section A.5.9 hereof. Upon such automatic
conversion, each share of Series A Preferred Stock shall be canceled and not
subject to reissuance as Series A Preferred Stock, but shall rather be
undesignated and unreserved Preferred Stock of the Corporation.
5.3 Conversion Ratio. The "Conversion Ratio" shall be determined by
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dividing the Original Liquidation Price by the Conversion Price (as defined in
Section A.5.4 hereof).
5.4 Conversion Price. The initial Conversion Price shall equal $10.00
per share. The Conversion Price shall be subject to adjustment from time to time
as follows:
5.4.1 Definitions. For purposes of this Section A.5.4, the
following definitions shall apply:
(i) "Additional Shares" shall mean all shares of Common Stock issued
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(or, with respect to options, rights or warrants, deemed to be issued in
accordance with Section A.5.4.2) by the Corporation after the date that the
original of the Series A Preferred Stock Certificate of Designation is filed
with the Secretary of State of the State of Delaware, other than in any of the
following transactions:
(a) in connection with the issuance to directors, officers,
employees, or consultants of the Corporation or its Affiliates, in connection
with their service to the Corporation, of options, rights, or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock pursuant to
stock purchase or stock options plans or agreements on terms from time to time
approved by the Board of Directors;
(b) upon the issuance of securities in an underwritten offering
of the Corporation's equity securities to the public pursuant to an effective
registration statement under the Securities Act;
(c) upon conversion of Series A Preferred Stock;
(d) upon the issuance of a stock dividend declared by the Board
of Directors to be paid on the Common Stock as a class, or upon any stock split
or other subdivision or combination of Common Stock;
(e) upon the exercise of options, rights, or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Series A Preferred
Stock outstanding or committed to be issued the date that the original of the
Series A Preferred Stock Certificate of Designation is filed with the Secretary
of State of the State of Delaware or described in (a) above;
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(f) upon the exercise of warrants delivered in connection with
borrowings, lines of credit or other credit facilities extended to the
Corporation;
(g) in connection with a strategic alliance or partnership, or
joint venture or development arrangement with any non-Affiliated Person;
(h) upon the issuance of shares issued in respect of the
antidilution provisions of this Certificate of Incorporation or other
antidilution provisions governing the Corporation's securities; or
(i) in connection with the issuance to an Affiliate of the
Corporation of securities of the Corporation, provided that such issuance does
not cause the Corporation's issued Common Stock to exceed 50,000,000 shares,
taking into consideration reserves for stock options, warrants, Conversion
Shares and other series of convertible preferred shares issued after the date
that the original of the Series A Preferred Stock Certificate of Designation is
filed with the Secretary of State of Delaware.
(ii) "Consideration" shall mean the following:
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(a) In the case of the issuance of Common Stock for cash, the
Consideration shall be deemed to be the aggregate amount of cash paid therefor
before deducting any discounts, commissions or other expenses allowed, paid or
incurred by the Corporation for any underwriting or otherwise in connection with
the issuance and sale thereof and excluding amounts paid or payable for accrued
interest or accrued dividends thereon.
(b) In the case of the issuance of Common Stock for a
consideration in whole or in part other than cash, the Consideration other than
cash, including securities acquired in exchange therefor (other than securities
by their terms so exchangeable), shall be deemed to be the fair value thereof as
determined in good faith by the Board of Directors, irrespective of any
accounting treatment; provided, however, that if, at the time of such
determination, the Common Stock is traded in the over-the-counter market, the
Nasdaq Stock Market, or on a national or regional securities exchange (or if
other securities constituting such Consideration are traded in the
over-the-counter market, the Nasdaq Stock Market or on a national or regional
securities exchange), such fair value as determined by the Board of Directors
shall not exceed the Current Market Value (as defined in Section A.5.4.1(iii))
of the Common Stock or of such other securities.
(c) In the case of the granting or issuance of options to
purchase or rights to subscribe for Common Stock that are deemed to be
Additional Shares under Section A.5.4.1(i) hereof, such Additional Shares shall
be deemed to be issued at the time such options or rights were granted or issued
and for a consideration equal to the Consideration (determined in the manner
provided in Section A.5.4.1(ii)(a) and Section A.5.4.1(ii)(b) hereof), if any,
received by the Corporation upon the issuance of such options or rights, plus
the additional minimum aggregate amount (as set forth in the instruments
relating thereto, without regard to any provision
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contained therein designed to protect against dilution), if any, to be received
by the Corporation upon the exercise of such options or rights.
(d) In the case of the granting or issuance of securities by
their terms convertible into or exchangeable for Common Stock that are deemed to
be Additional Shares under Section A.5.4.1(i) hereof, such Additional Shares
shall be deemed to be issued at the time such securities were granted or issued
and for a consideration equal to the Consideration (determined in the manner
provided in Sections Section A.5.4.1(ii)(a) and Section A.5.4.1(ii)(b) hereof),
if any, received by the Corporation for such securities (excluding any cash
received on account of accrued interest or accrued dividends), plus the
additional minimum aggregate amount (as set forth in the instruments relating
thereto, without regard to any provision contained therein designed to protect
against dilution) of consideration (determined in the manner provided in
Sections Section A.5.4.1(ii)(a) and Section A.5.4.1(ii)(b) hereof), if any, to
be received by the Corporation upon the conversion or exchange of such
securities.
(e) In the case of the granting or issuance of options to
purchase or rights to subscribe for securities by their terms convertible into
or exchangeable for Common Stock that are deemed to be Additional Shares under
Section A.5.4.1(i) hereof, such Additional Shares shall be deemed to be issued
at the time such securities were issued or the options or rights were granted or
issued or for a consideration equal to the Consideration (determined in the
manner provided in Section A.5.4.1(ii)(a) and Section A.5.4.1(ii)(b) hereof), if
any, received by the Corporation for such options or rights (excluding any cash
received on account of accrued interest or accrued dividends), plus the
additional Consideration (determined in the manner provided in Sections Section
A.5.4.1(ii)(a) and Section A.5.4.1(ii)(b) hereof), if any, to be received by the
Corporation upon the exercise of such options or rights.
(f) In the case of the issuance of Common Stock without
consideration, the Consideration shall be deemed to be $0.0001 per share, or
such lesser amount as shall be the then par value of the Common Stock.
(iii) "Current Market Value" of a given security on any given date
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shall be deemed to be the average of the daily closing prices per share of the
security for 20 consecutive business days selected by the Corporation before
such date. The closing price for each day shall be the last sale price regular
way or, in case no sale takes place on such day, the average of the closing bid
and asked prices regular way, in either case on the principal national or
regional securities exchange on which the security is listed or admitted to
trading or on the Nasdaq Stock Market or, if it is not listed or admitted to
trading on any national or regional securities exchange or on the Nasdaq Stock
Market, the average of the closing and asked prices as furnished by any member
of the National Association of Securities Dealers, Inc., selected from time to
time by the Corporation for that purpose, or if it is not a publicly traded
company, as determined by the Board of Directors of the Corporation in a good
faith resolution, based upon the best information available to it.
5.4.2 The maximum number of shares of Common Stock deliverable upon
the exercise, conversion or exchange of options, rights or warrants to subscribe
for, purchase or otherwise acquire Common Stock or Series A Preferred Stock (as
set forth in the instrument
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relating thereto without regard to any provisions contained therein designed to
protect against dilution) shall be deemed to be exercised, converted or
exchanged immediately upon any such grant or issuance. In the case that options
or rights granted or issued as set forth in Section A.5.4.1(i)(c) or Section
A.5.4.1(i)(e) expire, or in the case that all of the rights to exchange or
convert securities issued as set forth in Section A.5.4.1(i)(d) terminate, in
each case having been issued by the Corporation for Consideration (as determined
pursuant to Section A.5.4.1(i)(c), Section A.5.4.1(i)(d) and Section
A.5.4.1(i)(e) above), the Conversion Price shall forthwith be appropriately
readjusted to such Conversion Price as would have been in effect at the time of
such expiration or termination had such options or rights or securities, to the
extent outstanding immediately prior to such expiration or termination, never
been granted or issued, and the Common Stock issuable thereunder shall no longer
be deemed to be outstanding.
5.4.3 If the Corporation shall issue any Additional Shares
without Consideration or for consideration per share less than the Conversion
Price in effect immediately prior to the issuance of such Additional Shares, the
Conversion Price shall be adjusted according to the following formula:
CP = ((OS x OCP) + C) / (OS + NS)
where
CP = Adjusted Conversion Price;
OS = Shares of Common Stock or Common Stock Equivalents
outstanding or deemed outstanding (including those
shares deemed to be issued as a result of previous
adjustments of the Conversion Price pursuant to
Section A.5 hereof), on a fully diluted, as-converted
basis immediately prior to such issuance of Additional
Shares;
OCP = Conversion Price in effect immediately prior to such
issuance of Additional Shares;
C = Consideration (as calculated in accordance with
Section A.5.4.1(ii) hereof), if any, received by the
Corporation in such issuance of Additional Shares; and
NS = Number of Additional Shares (but excluding the
additional shares of Common Stock deemed issued only
as a result of such adjustment of the Conversion
Price).
5.4.4 No adjustment of the Conversion Price shall be made if such
adjustment would result in a change in a Conversion Price in an amount less than
$0.01 per share. Any Additional Shares issued or deemed issued (and any
Consideration received or deemed received) shall be included in subsequent
future adjustments, but only until such change in the Conversion Price as a
result of such cumulative adjustments is equal to at least $0.01 per share.
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5.4.5 No adjustment of the Conversion Price shall be made in
respect of non-stock dividends on the Common Stock or the Series A Preferred
Stock.
5.4.6 On any change in the number of shares of Common Stock
deliverable upon (i) the exercise of any options or rights deemed to be
Additional Shares under Section A.5.4.1(i) hereof, or (ii) the conversion of or
exchange for convertible or exchangeable securities deemed to be Additional
Shares under Section A.5.4.1(i) hereof, or (iii) the conversion of or exchange
for convertible or exchangeable securities issuable upon the exercise of any
options or rights deemed to be Additional Shares under Section A.5.4.1(i)
hereof, or on any change in the minimum purchase price of such options, rights
or securities, other than a change resulting from the antidilution provisions of
such options, rights or securities, then the Conversion Price for the Series A
Preferred Stock shall forthwith be readjusted to reflect such change with
respect to (x) such options or rights not exercised prior to such change, or (y)
such securities not converted or exchanged prior to such change, or (z) the
options or rights related to such securities not converted or exchanged prior to
such change, as the case may be.
5.4.7 If the number of shares of Common Stock outstanding at any
time after the effective date hereof is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, following the record date fixed for the determination of holders of
Common Stock entitled to receive such stock dividend, or the effective date of
such subdivision or split-up, the Conversion Price shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each such share of Series A Preferred Stock shall be increased in proportion to
such increase of outstanding shares of Common Stock.
5.4.8 If the number of shares of Common Stock outstanding at any
time after the effective date hereof is decreased by a combination of the
outstanding shares of Common Stock, then, following the effective date of such
combination, the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each such share of
Series A Preferred Stock shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.
5.4.9 Notwithstanding anything seemingly to the contrary herein,
in no event whatsoever shall the Conversion Price be adjusted to a number less
than the par value of the Conversion Stock; such an adjustment shall be deemed
not to be "appropriate" within the meaning of this Section A.5.
5.5 Reorganization or Reclassification. In the event of any
capital reorganization, or any reclassification of the capital stock of the
Corporation (other than a change in par value or as a result of a stock dividend
or subdivision, split-up or combination of shares), or any related series of
such transactions, the shares of Series A Preferred Stock shall, after such
reorganization or reclassification, be convertible into the kind and number of
shares of stock or other securities or property or cash of the Corporation or
entity resulting from such reorganization or reclassification to which such
holder would have been entitled, if immediately prior to such reorganization or
reclassification, such holder had converted the shares of Series A
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Preferred Stock held by such holder to Common Stock immediately prior to such
reorganization or reclassification.
5.6. Mechanics of Elective Conversion. Before any holder of
shares of Series A Preferred Stock shall be entitled to convert the same into
shares of Conversion Stock pursuant to Section A.5.1 hereof, such holder shall
surrender the certificate or certificates therefor, duly endorsed or in blank,
at the office of the Corporation or of any transfer agent for the Series A
Preferred Stock (or, in addition to the aforementioned places, at such other
place as the Board of Directors may reasonably designate), and shall give
written notice to the Corporation (in the manner described in Section A.7.3
hereof) at its principal corporate office, of the election to convert the same
and shall state therein the name or names in which the certificate or
certificates for shares of Conversion Stock are to be issued. The Corporation
shall use its commercially reasonable efforts promptly to (subject to Section
A.5.9), issue and deliver at such office to such holder of shares of Series A
Preferred Stock, or to the nominee or nominees of such holder, (x) a certificate
or certificates for the number of shares of Conversion Stock to which such
holder shall be entitled as herein provided, (y) a certificate representing any
shares of Series A Preferred Stock not so converted and (z) an amount of cash
equal to accrued but unpaid dividends on the shares converted, calculated
through the date of such conversion and, if applicable, the payment required by
Section A.5.7 and Section A.5.8. Any conversion shall be deemed to have been
made immediately prior to the close of business on (i) the date such written
notice is given (provided that such holder's certificate or certificates are
delivered to the Corporation within two business days after such notice is
given) or (ii) in any other case, on the date of such surrender of the shares of
Series A Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Conversion Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Conversion Stock on such date. Notwithstanding the foregoing, no written notice
of election to convert or surrender of certificates shall be required in the
event of an automatic conversion pursuant to Section A.5.2.
5.7 Fractional Shares. No fractional shares shall be issued upon
conversion of the Series A Preferred Stock into Conversion Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, in its
reasonable discretion, the Board of Directors may cause the Corporation to pay
cash to such holder equal to such fraction (calculated as to each conversion to
the nearest 1/100th of a share) multiplied by the applicable Conversion Price or
may round the number of shares of Conversion Stock to be issued to the nearest
whole share as follows: (i) any fractional shares equal to at least one-half
shall be rounded upward; and (ii) any fractional shares equal to less than
one-half shall be rounded downward.
5.8 Declared, but Unpaid Dividends. Promptly upon conversion, the
Corporation shall also pay to the former holders of shares of the Series A
Preferred Stock so converted an amount in cash equal to any and all accrued but
unpaid dividends on the shares of Series A Preferred Stock surrendered for
conversion through the date of such conversion (whether or not declared) out of
funds legally available for such payment; provided, however, that if the funds
of the Corporation legally available for payment of such dividends are
insufficient to pay all such dividends required to be paid on such date, those
funds which are legally available and not subject to such restrictions shall be
used to pay the maximum possible amount of such dividends and the remaining
dividends shall be paid as soon as practicable when
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additional funds of the Corporation not subject to such restrictions become
legally available therefor.
5.9 Transfer Taxes. The Corporation will pay any and all taxes
that may be payable in respect of the issue or delivery of shares of Conversion
Stock on conversion of shares of the Series A Preferred Stock pursuant to this
Section A.5. The Corporation shall not, however, be required to pay any tax that
may be payable in respect of any transfer involved in the issue or transfer and
delivery of shares of Conversion Stock in a name other than that in which the
shares of the Series A Preferred Stock so converted were registered, and no
issue or delivery shall be made unless and until the person requesting such
issue has paid to the Corporation the amount of any such tax or has established
to the satisfaction of the Corporation that such tax has been paid.
5.10 No Impairment; Cooperation. The Corporation will not,
through any reorganization, transfer of assets, consolidation, merger,
Liquidating Merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section A.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 Stock against impairment. Subject to Section A.4.1, this provision
shall not restrict the Corporation from effecting an amendment to its
Certificate of Incorporation in accordance with the General Company Law of the
State of Delaware. The Corporation shall assist and cooperate with any holder of
shares of Series A Preferred Stock required to make any filings or obtain any
approvals, governmental or otherwise, prior to or in connection with any
conversion of such shares hereunder (including, without limitation, making any
filings required to be made by the Corporation).
5.11 Certificate as to Adjustments. Upon the occurrence of each
event requiring adjustment or readjustment of the Conversion Price pursuant to
this Section A.5, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and shall prepare
and cause to be furnished to holders of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in reasonable detail
the facts upon which such adjustment or readjustment is based. The Corporation
also shall, upon written request of any holder of record of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (a) such adjustments and readjustments and (b) the Conversion
Price at the time in effect.
5.12 Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution or to vote on any
matter upon which such stockholders may be entitled to vote, the Corporation
shall give notice to each holder of shares of Series A Preferred Stock and to
each holder of outstanding warrants, options or other rights to acquire Series A
Preferred Stock at least 10 days prior to the date specified therein, specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or vote.
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5.13 Reservation of Stock Issuable Upon Conversion. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Conversion Stock solely for the purpose of effecting the
conversion of the outstanding shares of Series A Preferred Stock and all shares
of Series A Preferred Stock issuable upon exercise of outstanding warrants and
options, such number of shares of Conversion Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series A
Preferred Stock and all shares of Series A Preferred Stock issuable upon
exercise of outstanding warrants and options. All shares of Conversion Stock
that shall be so issued shall be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges arising out of or by
reason of the issue thereof.
Section 6. Replacement. Upon receipt of evidence reasonably
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satisfactory to the Corporation (an affidavit of the registered holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing shares of Series A Preferred Stock, and in the case
of any such loss, theft or destruction, upon receipt of indemnity reasonably
satisfactory to the Corporation, or, in the case of any such mutilation, upon
surrender of such certificate, the Corporation shall (at its expense) execute
and deliver in lieu of such certificate a new certificate of like kind
representing the number of shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
Series A Preferred Stock represented by such new certificate from the date to
which dividends have been fully paid on such lost, stolen, destroyed or
mutilated certificate.
Section 7. Miscellaneous.
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7.1 Definitions. For the purposes of Section A.1 through Section
A.7 of this Article Fourth:
"Affiliate" means, with respect to any Person, (a) each Person
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that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, twenty percent or more of the Stock (as
defined below) having ordinary voting power in the election of directors of such
Person, (b) each Person that controls, is controlled by or is under common
control with such Person and (c) in the case of individuals, the immediate
family members, spouses and lineal descendants of individuals who are Affiliates
of the Corporation. For purposes of this definition, "control" of a Person shall
-------
mean the possession, directly or indirectly, of the power to direct or cause the
direction of its management or policies, whether through the ownership of voting
securities, by contract or understanding, by virtue of being an executive
officer or a director or otherwise. For purposes of this definition, "Stock"
-----
means all shares, options, warrants, general or limited partnership or
membership interests or other equivalents (regardless of how designated) of or
in a Person, whether voting or nonvoting, including common stock preferred stock
or any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Common Stock" means, collectively, the Corporation's common
------------
stock, par value $.0001 per share, and any capital stock of any class of the
Corporation hereafter authorized which is not limited to a fixed sum or
percentage of par or stated value with respect to the rights
11
<PAGE>
of the holders thereof to participate in dividends or in the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of the Corporation.
"Conversion Stock" means shares of the Common Stock issuable upon
----------------
conversion of the Series A Preferred Stock, provided that if there is a change
such that the securities issuable upon conversion of the Series A Preferred
Stock are issued by a Person other than the Corporation or there is a change in
the class of securities so issuable, then the term "Conversion Stock" shall mean
----------------
the aggregate number of shares of the securities issuable upon conversion of the
Series A Preferred Stock if such securities are issuable in shares, or the
aggregate of the smallest units in which such securities are issuable if such
securities are not issuable in shares.
"Liquidation Value" of any share of Series A Preferred Stock as
-----------------
of any particular date shall be equal to the Original Liquidation Price per
share of Series A Preferred Stock, plus any and all accrued and unpaid
dividends, including those dividends required to be paid thereon under Section
A.2 hereof.
"Liquidating Merger" shall mean any merger, consolidation or sale
------------------
or exchange of all or substantially all of the property and assets of the
Corporation or any subsidiary thereof (other than with or to any Affiliate of
the Corporation), otherwise than in the usual and regular course of its
business, which will result in the stockholders of the Corporation immediately
prior to such transaction not holding (by virtue of such shares or securities
issued solely with respect thereto) at least 50% of the combined voting power of
the surviving, continuing or purchasing entity.
"Original Liquidation Price" of any share of Series A Preferred
--------------------------
Stock shall be equal to $10.00 per share.
"Person" means any individual, sole proprietorship, Company,
------
partnership, unincorporated organization, association, limited liability
Company, trust, joint venture or other business or not for profit entity or
government.
"Qualified IPO" means the sale of the Common Stock to the public
-------------
in a firm commitment public offering, pursuant to an effective registration
statement under the Securities Act of 1933, as amended (together with any
successor thereto, the "Securities Act") that generates gross proceeds to the
--------------
Corporation (before deducting underwriting discounts and other customary
offering expenses) in an aggregate amount equal to at least $35,000,000 at a
pre-money valuation of at least $500,000,000.
7.2 Notices. Except as otherwise expressly provided hereunder,
all notices referred to herein shall be in writing and shall be deemed given
upon the earlier of delivery thereof if by hand, or upon receipt if sent by mail
(registered or certified mail, return receipt requested and postage prepaid), or
on the next business day after deposit if sent by reputable overnight courier
service, charged prepaid, or upon transmission if sent by telecopy or facsimile
transmission (with request of assurance of receipt in a manner customary for
communication of such type), and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices, and
(ii) to any holder of shares of Series A
12
<PAGE>
Preferred Stock or of Conversion Stock, at such holder's address as it appears
in the stock records of the Corporation (unless otherwise indicated by any such
holder).
7.3 Severability. If any right, preference or limitation of the
Series A Preferred Stock set forth in this Certificate of Incorporation is
finally adjudicated by a court of competent jurisdiction to be invalid, unlawful
or incapable of being enforced by any rule of law or public policy, all other
rights, preferences and limitations set forth in this Certificate of
Incorporation which can be given effect without the invalid, unlawful or
unenforceable right, preference or limitation, shall, nevertheless, remain in
full force and effect, and no right, preference or limitation herein set forth
shall be dependent upon any other such right, preference or limitation unless so
expressed herein.
B. Series B Preferred Stock.
------------------------
Designation and Amount. A total of 3,800,000 shares of the
Corporation's Preferred Stock shall be designated as a series known as Series B
Convertible Participating Preferred Stock, par value $0.0001 per share (the
"Series B Preferred Stock").
------------------------
Section 2. Dividends and Distributions. The holders of Series B
Preferred Stock shall be entitled to receive dividends out of funds legally
available therefor at such times and in such amounts as the Board of Directors
may determine in its sole discretion; provided, however, that no such dividend
-----------------
may be declared or paid on any shares of Common Stock or Series A Preferred
Stock unless at the same time a dividend is declared or paid on all outstanding
shares of Series B Preferred Stock, with holders of Series A Preferred Stock,
Series B Preferred Stock and Common Stock sharing in any such dividends as if
they constituted a single class of stock and with each holder of shares of
Series B Preferred Stock entitled to receive such dividends based on the number
of shares of Common Stock into which such shares of Series B Preferred Stock are
then convertible in accordance with Section B.6 hereof.
Section 3. Liquidation; Merger, etc.
------------------------
3.1 Series B Liquidation Preference. Upon any liquidation, dissolution
-------------------------------
or winding up of the Corporation and its subsidiaries, whether voluntary or
involuntary (a "Liquidation Event"), each holder of outstanding shares of Series
-----------------
B Preferred Stock shall be entitled to be paid, on a pari passu basis to the
Series A Preferred, before any amount shall be paid or distributed to the
holders of the Common Stock and any other capital stock ranking on liquidation
junior to the Series B Preferred Stock (the Common Stock and such other capital
stock being referred to collectively as, "Junior Stock"), an amount per share of
------------
Series B Preferred Stock, payable in cash, equal to the sum of (i) $25.00 plus
----
any declared but unpaid dividends on such shares of Series B Preferred Stock
(such amount to be adjusted appropriately for stock splits, stock dividends,
recapitalizations and the like) (the "Series B Participation Amount") and (ii)
-----------------------------
such amount of the remaining assets of the Corporation as would have been
payable per share of Series B Preferred Stock had each such share been converted
to Common Stock immediately prior to such Liquidation Event pursuant to the
provisions of Section B.6 hereof (the sum of (i) and (ii), the "Series B
--------
Preference Amount"); provided, however, that in the event that the Series B
-----------------
Preference Amount determined pursuant to the foregoing formula would result in
13
<PAGE>
amount equal to or greater than $100.00 per share (such amount to be adjusted
appropriately for stock splits, stock dividends, recapitalizations and the
like), the Series B Participation Amount shall be adjusted in a linear fashion
such that the adjusted Series B Participation Amount equals the product of (x)
the Series B Participation Amount prior to the adjustment and (y) the Adjustment
Factor (as defined below). The "Adjustment Factor" shall be a number not less
than zero and not greater than one determined by the following formula:
Adjustment Factor = 1 - ( x - y )
------------
z
where:
x = the Series B Preference Amount prior to any adjustment to the
Series B Participation Amount (but adjusted appropriately for
stock splits, stock dividends, recapitalizations and the like);
y = $100.00 per share (adjusted appropriately for stock splits,
stock dividends, recapitalizations and the like);
z = $25.00 per share (adjusted appropriately for stock splits,
stock dividends, recapitalizations and the like).
If the amounts available for distribution to holders of Series A Preferred
Stock and Series B Preferred Stock upon a Liquidation Event are not sufficient
to pay all amounts due, such holders shall share ratably in any distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled.
3.2 Remaining Assets. After the payment of all preferential amounts
----------------
required to be paid to the holders of the Series B Preferred Stock and any other
class or series of stock of the Corporation ranking on liquidation on a parity
with the Series B Preferred Stock, the holders of shares of Junior Stock then
outstanding shall be entitled to receive the remaining assets and funds of the
Corporation available for distribution to its stockholders.
3.3 Amount Payable in Mergers, etc. The holders of not less than a
------------------------------
Majority Interest may elect to have treated as a Liquidation Event (i) any
merger or consolidation of the Corporation into or with another corporation
(except one in which the holders of capital stock of the Corporation immediately
prior to such merger or consolidation continue to hold at least a majority of
the voting power of the capital stock of the surviving corporation), (ii) any
sale of all or substantially all of the assets of the Corporation, or (iii) any
other transaction by or as a result of which a single person (or group of
affiliated persons) newly acquires or holds stock representing a majority of the
Corporation's outstanding voting power (a "Change of Control Transaction"). In
such event, all consideration payable to the stockholders of the Corporation by
the relevant purchaser or the Corporation in connection with a merger,
consolidation or Change of Control Transaction, or all consideration payable to
the Corporation and distributable to its stockholders, together with all other
available assets of the Corporation (net of obligations owed by the
Corporation), in the case of an asset sale, shall be paid by the purchaser or
distributed by
14
<PAGE>
the Corporation in redemption of the Series B Preferred Stock, as applicable, to
the holders of capital stock of the Corporation in accordance with the
preferences and priorities set forth in Sections B.3.1 and B.3.2 above, with
such preferences and priorities specifically intended to be applicable in any
such merger, consolidation, asset sale or Change of Control Transaction as if
the same were a Liquidation Event. The Corporation shall promptly provide to the
holders of shares of Series B Preferred Stock such information concerning the
terms of such merger, consolidation, asset sale or Change of Control Transaction
and the value of the assets of the Corporation as may reasonably be requested by
the holders of Series B Preferred Stock. If applicable, the Corporation shall
cause the agreement or plan of merger, consolidation or Change of Control
Transaction agreement to provide for a rate at which the shares of capital stock
of the Corporation are converted into or exchanged for cash, new securities or
other property, or redeemed, on a basis which gives effect to the provisions of
this Section B.3. The amount deemed distributed to the holders of Series B
Preferred Stock upon any such transaction shall be the cash or the value of the
property, rights or securities distributed to such holders by the Corporation or
the acquiring person, firm or other entity, as applicable; provided, however,
that in the event the amount per share to be paid in any such transaction is
$25.00 or less (such amount to be adjusted appropriately for stock splits, stock
dividends, recapitalizations and the like), such amount shall be paid in cash.
The value of such property, rights or other securities shall be determined as
provided below in good faith by agreement of the Board of Directors of the
Corporation and a Majority Interest. Notwithstanding anything to the contrary
contained herein, the holders of shares of Series B Preferred Stock shall have
the right to elect by vote of a Majority Interest to give effect to the
conversion rights contained in Section B.6 (or by vote of a Majority Interest to
give effect to the rights contained in Section B.7.5, if applicable) instead of
giving effect to the provisions contained in this Section B.3.3 with respect to
the shares of Series B Preferred Stock owned by them. Any election pursuant to
this Section B.3.3 shall be made by written notice to the Corporation at least 5
days prior to the closing of the relevant transaction, and any such election
shall bind all holders of this Series B Preferred Stock.
For purposes of valuing any securities or other noncash or
consideration to be delivered to the holders of the Series B Preferred Stock any
transaction to which this Section B.3 is applicable, the following shall apply:
(i) If traded on a nationally recognized securities exchange or
inter-dealer quotation system, the value shall be deemed to be the
average of the closing prices of the securities on such exchange or
system over the 30-day period ending three (3) business days prior to
the closing;
(ii) If traded over-the-counter, the value shall be deemed to be
the average of the closing bid prices over the 30-day period ending
three (3) business days prior to the closing; and
(iii) If there is no active public market, the value shall be the
fair market value thereof, as mutually determined by the Corporation
and the holders of not less than a Majority Interest, provided that if
the Corporation and the holders of a Majority Interest are unable to
reach agreement, then by independent appraisal by a mutually agreed to
investment banker, the fees of which shall be paid by the Corporation.
15
<PAGE>
Section 4. Election of Directors; Voting.
-----------------------------
4.1 Election of Directors. The holders of outstanding shares of Series
---------------------
B Preferred Stock shall, voting together as a separate class, be entitled to
elect one (1) Director of the Corporation. Such Director shall be the candidate
receiving the greatest number of affirmative votes (with each holder of Series B
Preferred Stock entitled to cast one vote for or against each candidate with
respect to each share of Series B Preferred Stock held by such holder) of the
outstanding shares of Series B Preferred Stock (the "Series B Preferred Stock
------------------------
Director Designee"), with votes cast against such candidate and votes withheld
-----------------
having no legal effect. The election of the Series B Preferred Stock Director
Designee shall occur (i) at the annual meeting of holders of capital stock, (ii)
at any special meeting of holders of capital stock, (iii) at any special meeting
of holders of Series B Preferred Stock called by holders of not less than a
majority interest of the outstanding shares of the Series B Preferred Stock (a
"Majority Interest") or (iv) by the written consent of the holder or holders of
not less than a Majority Interest. If at any time when any share of Series B
Preferred Stock is outstanding any Series B Preferred Stock Director Designee
should cease to be a Director for any reason, the vacancy shall only be filled
by the vote or written consent of the holders of the outstanding shares of
Series B Preferred Stock, voting together as a separate class, in the manner and
on the basis specified above or as otherwise provided by law. The holders of
outstanding shares of Series B Preferred Stock shall also be entitled to vote
for all other Directors of the Corporation together with holders of all other
shares of the Corporation"s outstanding capital stock entitled to vote thereon,
voting as a single class, with each outstanding share entitled to the same
number of votes specified in Section B.4.2. Notwithstanding the foregoing, the
holders of outstanding shares of Series B Preferred Stock, may, in their sole
discretion, determine to elect no Series B Preferred Stock Director Designee
from time to time, and during any such period the Board of Directors nonetheless
shall be deemed duly constituted.
4.2 Voting Generally. Each outstanding share of Series B Preferred
----------------
Stock shall be entitled to a number of votes equal to the number of shares of
Common Stock into which such share of Series B Preferred Stock is then
convertible pursuant to Section B.6 hereof as of the record date for the vote or
written consent of stockholders, if applicable. Each holder of shares of Series
B Preferred Stock shall be entitled to notice of any stockholder"s meeting in
accordance with the by-laws of the Corporation and shall vote with holders of
the Common Stock, voting together as single class, upon all matters submitted to
a vote of stockholders, excluding those matters required to be submitted to a
class or series vote pursuant to the terms hereof (including, without
limitation, Section B.8) or by law.
Section 5. Redemption.
----------
5.1 Redemption.
----------
5.1.1 At any time on or after August 25, 2006, upon the election of
the holder or holders of not less a Majority Interest, the Corporation shall
redeem, out of funds legally available therefor, up to thirty-three and
one-third percent (33"%) of the originally issued and
16
<PAGE>
outstanding shares of Series B Convertible Preferred Stock held by each holder
of Series B Convertible Preferred Stock at such time;
5.1.2 At any time on or after August 25, 2007, upon the election of
the holder or holders of not less than a Majority Interest, the Corporation
shall redeem, out of funds legally available therefor, up to that percentage of
outstanding shares of Series B Convertible Preferred Stock that would, when
combined with any prior redemptions pursuant to Section B.5.1.1 above, result in
the redemption by the Corporation of up to sixty-six and two-thirds percent
(66"%) of the originally issued and outstanding shares of Series B Convertible
Preferred Stock held by each holder of Series B Convertible Preferred Stock at
such time; and
5.1.3 At any time on or after August 25, 2008, upon the election of
the holder or holders of not less than a Majority Interest, the Corporation
shall redeem, out of funds legally available therefor, up to that percentage of
outstanding shares of Series B Convertible Preferred Stock that would, when
combined with any prior redemptions pursuant to Section B.5.1.1 and Section
B.5.1.2 above, result in the redemption by the Corporation of up to one hundred
percent (100%) of the outstanding shares of Series B Convertible Preferred Stock
held by each holder of Series B Convertible Preferred Stock at such time.
The foregoing elections shall be made by such holders giving the Corporation and
each of the other holders of Series B Preferred Stock not less than sixty (60)
business days prior written notice, which notice shall set forth the date for
such redemption and the percentage of such shares of Series B Preferred Stock to
be redeemed from each holder (which percentage so elected on each redemption
date shall be the same for each holder). The price per share for Series B
Preferred Stock in connection with any redemption made pursuant to Section B.5.1
shall equal the Series B Participation Amount (the "Series B Redemption Price").
-------------------------
5.2 Redemption Date and Price Determination. Upon the election of the
---------------------------------------
holders of not less than a Majority Interest to cause the Corporation to redeem
Series B Preferred Stock pursuant to Section B.5.1, each holder of Series B
Preferred Stock shall be deemed to have elected to cause the applicable
percentage of such shares held by such holder to be so redeemed or to so
participate. The date upon which a redemption is to occur in accordance with
Section B.5.1 shall be specified in the notice of redemption pursuant to Section
B.5.1 and shall be referred to as a "Redemption Date." Subject to Section B.5.3,
---------------
the aggregate Series B Redemption Price shall be payable in cash in immediately
available funds to the respective holders on the Redemption Date in the amount
specified in Section B.5.1.
5.3 Insufficient Funds. If the funds of the Corporation legally
------------------
available for the redemption of shares of Series B Preferred Stock on the
Redemption Date are insufficient to redeem the total number of such shares
required to be redeemed on such date, the Corporation shall (i) take such action
as shall be necessary or appropriate, to the extent reasonably within its
control, to remove promptly any impediments to its ability to redeem the total
number of shares of Series B Preferred Stock required to be so redeemed,
including, without limitation, (A) reducing the stated capital of the
Corporation or causing a revaluation of the assets of the Corporation under
Section 154 of the Delaware General Corporation Law, to the extent permissible
under applicable law, to create sufficient surplus to make such redemption and
(B)
17
<PAGE>
incurring any indebtedness necessary to make such redemption, and (ii) in any
event, use any funds that are legally available to redeem the maximum possible
number of such shares from the holders of such shares to be redeemed in
proportion to the respective number of such shares that otherwise would have
been redeemed if all such shares had been redeemed in full. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of such shares of Series B Preferred Stock, such funds will
immediately be used to redeem the balance of the shares that the Corporation
became obligated to redeem on the Redemption Date (but which it has not yet
redeemed) at the Series B Redemption Price.
In the event that the Corporation fails for any reason to redeem shares for
which redemption is required pursuant to this Section B.5, including without
limitation due to a prohibition of such redemption under the Delaware General
Corporation Law, then such shares shall continue to be outstanding and entitled
to all of the rights and preferences provided herein, and during the period from
the applicable Redemption Date through the date on which such shares are
redeemed, the applicable redemption price shall increase at the rate per annum
equal to 3% in excess of the rate established from time to time by Citibank,
N.A. as its prime rate (the "Prime Rate") provided, however, that in no event
---------- -------- -------
shall such interest exceed the maximum permitted rate of interest under
applicable law (the "Maximum Permitted Rate"). In the event that fulfillment of
----------------------
any provision hereof results in such rate of interest being in excess of the
Maximum Permitted Rate, the obligation to be fulfilled shall automatically be
reduced to eliminate such excess; provided, however, that, to the extent
-------- -------
permitted by law, any subsequent increase in the Maximum Permitted Rate shall be
retroactively effective to the applicable Redemption Date.
5.4 Surrender of Certificates. Each holder of shares of Series B
-------------------------
Preferred Stock to be redeemed shall surrender the certificate or certificates
representing such shares to the Corporation, duly assigned or endorsed for
transfer to the Corporation (or accompanied by duly executed stock powers
relating thereto), or, in the event the certificate or certificates are lost,
stolen or missing, shall deliver an affidavit or agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection therewith (an "Affidavit of Loss"), at the principal executive office
-----------------
of the Corporation or such other place as the Corporation may from time to time
designate by notice to the holders of Series B Preferred Stock, and each
surrendered certificate shall be canceled and retired and the Corporation shall
thereafter make payment of the applicable Series B Redemption Price by certified
check or wire transfer; provided, however, that if the Corporation has
-------- -------
insufficient funds legally available to redeem all shares of Series B Preferred
Stock required to be redeemed, each such holder shall, in addition to receiving
the payment of the portion of the applicable Series B Redemption Price that the
Corporation is not prohibited from paying by certified check or wire transfer,
receive a new stock certificate for those shares of Series B Preferred Stock not
so redeemed.
18
<PAGE>
Section 6. Conversion. The holders of Series B Preferred Stock
shall have the following conversion rights:
6.1 Right to Convert. Each share of Series B Preferred Stock shall be
----------------
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share and on or prior to the fifth (5th) day prior to a
Redemption Date, if any, at the office of the Corporation or any transfer agent
for such series, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $25.00 by the Conversion Price at the
time in effect for such series (the "Conversion Rate"). In addition, the holders
---------------
of shares of Series B Preferred Stock shall be entitled at any time, upon the
written election of the holder or holders of not less than a Majority Interest,
without the payment of any additional consideration, to cause all (but not less
than all) of the outstanding shares of Series B Preferred Stock to be converted
into Common Stock on the basis that each outstanding share of Series B Preferred
Stock shall be converted into the number of fully paid and nonassessable shares
of Common Stock which results from dividing $25.00 by the Conversion Price in
effect at the time of such conversion, and upon the election to so convert in
the manner and on the basis specified in this sentence, all holders of the
Series B Preferred Stock shall be deemed to have elected to voluntarily convert
all outstanding shares of Series B Preferred Stock pursuant to this Section
B.6.1. The initial "Conversion Price" per share for shares of Series B Preferred
Stock shall be $25.00, subject to adjustment as set forth in Section B.7.
6.2 Automatic Conversion. Each share of Series B Preferred Stock shall
--------------------
automatically be converted, without the payment of any additional consideration,
into fully paid and nonassessable shares of Common Stock at the Conversion Rate
as of, and in all cases subject to, the closing of the Corporation"s first
underwritten offering to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act");
--------------
covering the offer and sale of shares of the Corporation"s common stock (i) in
which proceeds received by the Corporation (after deduction of underwriter
discounts and commissions) equal or exceed $100,000,000, (ii) with respect to
which such Common Stock is listed for trading on either the New York Stock
Exchange or the NASDAQ National Market,(iii) at an initial public offering price
per share of Common Stock, after underwriter discounts and commissions, of not
less than (A) $40.00 per share, in the case of an offering which closes on or
prior to December 31, 2000, (B) $43.75 per share, in the case of an offering
which closes from January 1, 2001 to March 31, 2001, (C) $50.00 per share in the
case of an offering which closes from April 1, 2001 to December 31, 2001, (D)
$56.25 per share, in the case of an offering which closes from January 1, 2002
to August 31, 2002 or (E) $62.50 per share in the case of an offering which
closes after August 31, 2002 (in each case appropriately adjusted for any stock
split, stock dividend, combination, recapitalization and the like) (a "QPO" or a
---
"Qualified Public Offering"). If the Corporation's first underwritten offering
-------------------------
of Common Stock would not otherwise be a QPO, then the Conversion Price shall be
adjusted downward such that the adjusted Conversion Price is equal to the
initial public offering price per share in such public offering divided by
either 1.60, 1.75, 2.00, 2.25 or 2.50, as applicable (for each of the respective
offerings described in (A) - (E) in the immediately preceding sentence);
provided that in no event shall the Conversion Price be reduced by operation of
this paragraph to an amount which is less than $10.00 and upon such adjustment
such offering shall be deemed to be a QPO. If a closing of a QPO occurs, all
19
<PAGE>
outstanding shares of Series B Preferred Stock shall be deemed to have been
converted into shares of Common Stock immediately prior to such closing.
6.3 Procedure for Conversion.
------------------------
6.3.1 Voluntary Conversions. Upon election to convert pursuant to
---------------------
Section B.6.1, the relevant holder of Series B Preferred Stock shall
surrender the certificate or certificates representing the Series B
Preferred Stock being converted to the Corporation, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed
stock powers relating thereto) or shall deliver an affidavit of loss to the
Corporation, at its principal executive office or such other place as the
Corporation may from time to time designate by notice to the holders of the
Series B Preferred Stock. Upon surrender of such certificate(s) or delivery
of an affidavit of loss, the Corporation shall issue and send by hand
delivery, by courier or by first class mail (postage prepaid) to the holder
thereof or to such holder"s designee, at the address designated by such
holder, certificates for the number of shares of Common Stock to which such
holder shall be entitled upon conversion. The issuance of certificates for
Common Stock upon conversion of Series B Preferred Stock shall be deemed
effective as of the date of surrender of such Series B Preferred Stock
certificates or delivery of such affidavit of loss and will be made without
charge to the holders of such shares for any issuance tax in respect
thereof or other costs incurred by the Corporation in connection with such
conversion and the related issuance of such stock.
6.3.1 Automatic Conversion. As of the closing of a QPO (the
--------------------
"Automatic Conversion Date"), all outstanding shares of Series B Preferred
-------------------------
Stock shall be converted into shares of Common Stock without any further
action by the holders of such shares and whether or not the certificates
representing such shares of Series B Preferred Stock are surrendered to the
Corporation or its transfer agent. On the Automatic Conversion Date, all
rights with respect to the Series B Preferred Stock so converted shall
terminate, except any of the rights of the holders thereof upon surrender
of their certificate or certificates therefor or delivery of an affidavit
of loss thereof to receive certificates for the number of shares of Common
Stock into which such Series B Preferred Stock has been converted. If so
required by the Corporation, certificates surrendered for conversion shall
be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or by his, her or its attorney duly authorized in
writing. Upon surrender of such certificates or affidavit of loss, the
Corporation shall issue and deliver to such holder, promptly (and in any
event in such time as is sufficient to enable such holder to participate in
such QPO) at such office and in its name as shown on such surrendered
certificate or certificates, a certificate or certificates for the number
of shares of Common Stock into which the shares of the Series B Preferred
Stock surrendered are convertible on the Automatic Conversion Date.
6.4 Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion of the
shares of Series B Preferred Stock such
20
<PAGE>
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 B Preferred Stock; and
if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all of the then outstanding
shares of Series B Preferred Stock, the Corporation will take such corporate
action as may be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such purpose,
and to reserve such shares for issuance upon such conversion.
6.5 No Closing of Transfer Books. The Corporation shall not close its
----------------------------
books against the transfer of shares of Series B Preferred Stock in any manner
that would interfere with the timely conversion of any shares of Series B
Preferred Stock.
Section 7. Adjustments.
-----------
7.1 Adjustments to the Conversion Price. Except as provided in Section
-----------------------------------
B.7.2 and except in the case of an event described in Section B.7.3, if and
whenever after the date on which the Amended and Restated Certificate of
Incorporation becomes effective (the "Closing Date") the Corporation shall issue
------------
or sell, or is, in accordance with this Section B.7.1, deemed to have issued or
sold, any shares of Common Stock for a consideration per share less than the
Conversion Price in effect immediately prior to the time of such issuance or
sale (a "Dilutive Issuance"), then, upon such Dilutive issuance, the Conversion
-----------------
Price shall be reduced as follows:
(X) if such Dilutive Issuance occurs at any time on or prior to
August 25, 2001 (except in connection with issuances of shares of
Common Stock to strategic investors in a strategic alliance or other
corporate partnering transaction approved by the Board of Directors of
the Corporation, (a "Strategic Investment") which shall be subject to
--------------------
clause (Y) below), the Conversion Price shall be reduced to the price
so as to be equal to the lowest consideration per share (determined as
provided in Section B.7.1.1, Section B.7.1.2 or Section B.7.1.5, as
applicable) received for each additional share upon such dilutive
issuance.
(Y) if such Dilutive Issuance occurs in connection with a
Strategic Investment or at any time after August 25, 2001, the
Conversion Price shall be reduced to the price determined by dividing
(i) an amount equal to the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied
by the then existing Conversion Price and (2) the consideration, if
any, received by the Corporation upon such issue or sale (determined
as set forth below) by (ii) the total number of shares of Common Stock
outstanding immediately prior to such issue or sale plus the number of
shares of Common Stock so issued or sold.
For purposes of this Section B.7.1, the following shall also be
applicable:
7.1.1 Issuance of Rights or Options. If the Corporation shall, at
-----------------------------
any time after the Closing Date, in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to subscribe
for or to purchase, or any
21
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options for the purchase of, Common Stock or any stock or security convertible
into or exchangeable for Common Stock (such warrants, rights or options being
called "Options" and such convertible or exchangeable stock or securities being
-------
called "Convertible Securities"), in each case for consideration per share
----------------------
(determined, as provided in this paragraph and in Section B.7.1.5 less than the
Conversion Price, whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, then the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options, or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon exercise of such Options, shall be deemed
to have been issued as of the date of granting of such Options (and thereafter
shall be deemed to be outstanding), at a price per share equal to the amount
determined by dividing (A) the total amount, if any, received or receivable by
the Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock deemed to have been so issued. Except as
otherwise provided in Section B.7.1.3, no adjustment of the Conversion Price
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.
7.1.2 Issuance of Convertible Securities. If the Corporation
----------------------------------
shall, at any time after the Closing Date, in any manner issue or sell any
Convertible Securities for consideration per share (determined as provided in
this paragraph and in Section B.7.1.5 less than the Conversion Price, whether or
not the rights to exchange or convert any such Convertible Securities are
immediately exercisable, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been issued, as of the date of the issue or sale of such
Convertible Securities (and thereafter shall be deemed to be outstanding), at a
price per share equal to the amount determined by dividing (A) the total amount
received or receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
deemed to have been so issued; provided, that (1) except as otherwise provided
--------
in Section B.7.1.3, no adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities and (2) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such Convertible
Securities, no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
7.1.3 Change in Option Price or Conversion Rate. If there shall
-----------------------------------------
occur a change in (A) the maximum number of shares of Common Stock issuable in
connection with any Option referred to in
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Section B.7.1 or any Convertible Securities referred to in Section B.7.1 or 2,
(B) the purchase price provided for in any Option referred to in Section B.7.1,
(C) the additional consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in Section B.7.1 or 2 or (D)
the rate at which Convertible Securities referred to in Section B.7.1 or (2) are
convertible into or exchangeable for Common Stock (in each case, other than in
connection with an event described in Section B.7.2, then the Conversion Price
in effect at the time of such event shall be readjusted to the Conversion Price
that would have been in effect at such time had such Options or Convertible
Securities that are still outstanding provided for such changed maximum number
of shares, purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold, but only if as a
result of such adjustment the Conversion Price then in effect is thereby
reduced; and on the termination or repricing of any such Option or any such
right to convert or exchange such Convertible Securities, the Conversion Price
then in effect hereunder shall be increased to the Conversion Price that would
have been in effect at the time of such termination or repricing had such Option
or Convertible Securities, to the extent outstanding immediately prior to such
termination (i.e., to the extent that fewer than the number of shares of Common
Stock deemed to have been issued in connection with such Option or Convertible
Securities were actually issued), never been issued or issued at such higher
price, as the case may be.
7.1.4 Adjustments for Other Dividends and Distributions. In the
-------------------------------------------------
event the Corporation at any time or from time to time shall make or issue, or
fix a record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities or other
property of the Corporation other than shares of Common Stock, then and in each
such event provision shall be made so that the holders of the Series B Preferred
Stock shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities or other property
of the Corporation that they would have received had the Series B Preferred
Stock been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities receivable by them as aforesaid during
such period giving application to all adjustments called for during such period
under this paragraph with respect to the rights of the holders of the Series B
Preferred Stock; and provided further, however, that no such adjustment shall be
made if the holders of Series B Preferred simultaneously receive a dividend or
other distribution of such securities or other property in an amount equal to
the amount of such securities as they would have received if all outstanding
share of Series B Preferred Stock had been converted into Common Stock on the
date of such event.
7.1.5 Consideration for Stock. In case any shares of Common Stock
-----------------------
shall be issued or sold, or deemed issued or sold, for cash, the consideration
received therefor shall be deemed to be the amount received or to be received by
the Corporation therefor (determined with respect to deemed issuances and sales
in connection with Options and Convertible Securities in accordance with clause
(A) of Section B.7.1.1 or 2, as appropriate. In case any shares of Common Stock
shall be issued or sold, or deemed issued or sold, for a consideration other
23
<PAGE>
than cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration received
or to be received by the Corporation (determined with respect to deemed
issuances and sales in connection with Options and Convertible Securities in
accordance with clause (A) of Section B.7.1.1 or 2 as appropriate) as determined
in good faith by the Board of Directors of the Corporation. In case any Options
shall be issued in connection with the issue and sale of other securities of the
Corporation, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such Options
shall be deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation and a Majority Interest.
7.1.6 Record Date. In case the Corporation shall take a record of
------------
the holders of its Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
7.1.7 Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation; provided, that the disposition of any such
--------
shares shall be considered an issue or sale of Common Stock for the purpose of
this Section B.7.
7.2 Certain Issues of Common Stock Excepted. Anything herein to the
---------------------------------------
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Conversion Price in the case of the issuance from and after
the Closing Date of (i) shares of Common Stock upon conversion of shares of
Series A Preferred Stock and Series B Preferred Stock or upon exercise of
warrants to purchase Common Stock outstanding as of August 25, 2000, (ii) shares
issued in exchange for the stock or assets of another company in connection with
the acquisition of or merger into such company; provided, that such actions
shall have been approved by a majority of the members of the Board of Directors,
which shall include the Series B Preferred Stock Director Designee, or (iii) up
to an aggregate of 7,500,000 shares of Common Stock (subject to appropriate
adjustment for any stock split, stock dividend or similar event) to directors,
officers, employees or consultants of the Corporation in connection with their
service as directors of the Corporation, their employment by the Corporation or
their retention as consultants by the Corporation or to the National Advisory
Board, in each case authorized by the Board of Directors and issued pursuant to
the Corporation's 2000 Incentive Compensation Plan or any other equity incentive
plan approved by a Majority Interest ("Excluded Shares"), plus such number of
Excluded Shares that are repurchased by the Corporation from such persons after
such Closing Date in accordance with this Amended and Restated Certificate of
Incorporation, pursuant to contractual rights held by the Corporation and at
repurchase prices not exceeding the respective original purchase
24
<PAGE>
prices (appropriately adjusted to reflect the occurrence of any event described
in Section B.7.3 paid by such persons to the Corporation therefor.
7.3 Subdivision or Combination of Common Stock. In case the
------------------------------------------
Corporation shall at any time after the Closing Date subdivide its outstanding
shares of Common Stock into a greater number of shares (by any stock split,
stock dividend or otherwise), the Conversion Price in effect immediately prior
to such subdivision shall be proportionately reduced, and, conversely, in case
the outstanding shares of Common Stock shall be combined into a smaller number
of shares, the Conversion Price in effect immediately prior to such combination
shall be proportionately increased. In the case of any such subdivision, no
further adjustment shall be made pursuant to Section B.7.1.4 by reason thereof.
7.4 Reorganization or Reclassification. If any capital reorganization
----------------------------------
or reclassification of the capital stock of the Corporation shall be effected in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization or reclassification, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Series B
Preferred Stock shall thereupon have the right to receive, upon the basis and
upon the terms and conditions specified herein and in lieu of the shares of
Common Stock immediately theretofore receivable upon the conversion of such
share or shares of Series B Preferred Stock, as the case may be, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such Common Stock immediately theretofore receivable upon
such conversion had such reorganization or reclassification not taken place, and
in any such case appropriate provisions shall be made with respect to the rights
and interests of such holder to the end that the provisions hereof (including,
without limitation, provisions for adjustments of the Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.
7.5 Adjustment for Merger or Reorganization, etc. In case of any
--------------------------------------------
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation, each share of Series B Preferred Stock shall thereafter be
convertible into the kind 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 Series B 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 Section B.7 set forth with
respect to the rights and interests thereafter of the holders of the Series B
Preferred Stock, to the end that the provisions set forth in Section B.7
(including provisions with respect to changes in and other adjustments of the
Series B 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 Series B Preferred Stock.
Notwithstanding anything to the contrary contained herein, each holder of shares
of Series B Preferred Stock shall have the right to elect to give effect to the
conversion rights contained in Section B.6 (or the rights contained in Section
B.3.3, if applicable) instead of giving effect to the provisions contained in
this Section B.7.3 with respect to the shares of Series B Preferred Stock owned
by such holder.
25
<PAGE>
Section 8. Covenants. The Corporation shall not, without first having
---------
provided written notice of such proposed action to each holder of outstanding
shares of Series B Preferred Stock and having obtained the affirmative vote or
written consent of the holders of a Majority Interest:
8.1 declare or pay any dividends or make any distributions of cash,
property or securities of the Corporation in respect of its capital stock (other
than (i) with respect to the Series A Preferred Stock or (ii) dividends that are
paid pro rata to the holders of the Series B Preferred Stock), or apply any of
its assets to the redemption, retirement, purchase or other acquisition of its
capital stock or stock appreciation, phantom stock or similar rights, directly
or indirectly, through subsidiaries or otherwise, except for (i) the redemption
of Series B Preferred Stock pursuant to and as provided in this Amended and
Restated Certificate of Incorporation, (ii) the repurchase of Excluded Shares
pursuant to rights held contractual by the Corporation and at repurchase prices
not exceeding the respective original purchase price (appropriately adjusted to
reflect the occurrence of any event described in Section B.7.3, or (iii)
dividends or distributions payable solely in shares of Common Stock;
8.2 authorize or issue, or obligate itself to issue, any convertible
debt or other debt with any equity participation or any other equity security
ranking senior to the Series B Preferred Stock as to liquidation, sale or merger
preferences, conversion, redemption or dividend rights or with any special
voting rights;
8.3 amend, alter or repeal any provision of, or add any provision to,
Section B of this Amended and Restated Certificate of Incorporation or otherwise
alter or change the rights, preferences, privileges or powers of, or
restrictions provided for the benefit or, the Series B Preferred Stock;
8.4 otherwise adopt any amendment to this Amended and Restated
Certificate of Incorporation or the Company"s By-laws that adversely affects the
powers, preferences or material rights of the Series B Preferred Stock;
8.5 increase the number of authorized shares of Series B Preferred
Stock or reclassify any capital stock;
8.6 change the nature of the business now conducted by the Company;
8.7 effect a recapitalization or reorganization in a form which
results in the termination of the Corporation"s status as a Corporation under
the Internal Revenue Code of 1986, as amended (including without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes);
8.8 enter into any agreement to do any of the foregoing that is not
expressly made conditional on obtaining the affirmative vote or written consent
of a Majority Interest.
26
<PAGE>
Further, the Corporation shall not, by amendment of this Amended and
Restated Certificate of Incorporation or through any Liquidation Event or other
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, agreement or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation and shall at all times in good faith
assist in the carrying out of all the provisions of this Article IV and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holders of the Series B Preferred Stock against impairment.
Any successor to the Corporation shall agree in writing, as a condition to such
succession, to carry out and observe the obligations of the Corporation
hereunder with respect to the Series B Preferred Stock.
Section 9. Notice; Adjustments.
-------------------
9.1 Liquidation Events, Extraordinary Transactions, Etc. In the event
---------------------------------------------------
(i) the Corporation establishes a record date to determine the holders of any
class of securities who are entitled to receive any dividend or other
distribution or who are entitled to vote at a meeting (or by written consent) in
connection with any of the transactions identified in clause (ii) hereof, or
(ii) any Liquidation Event, event deemed a Liquidation Event pursuant to Section
B.3.3 hereof, QPO or any other public offering becomes reasonably likely to
occur, the Corporation shall mail or cause to be mailed by first class mail
(postage prepaid) to each holder of Series B Preferred Stock at least thirty
(30) days prior to such record date specified therein or the expected effective
date of any such transaction, whichever is earlier, a notice specifying (A) the
date of such record date for the purpose of such dividend or distribution or
meeting or consent and a description of such dividend or distribution or the
action to be taken at such meeting or by such consent, (B) the date on which any
such Liquidation Event, event deemed a Liquidation Event pursuant to Section
B.3.3 hereof, QPO or other public offering is expected to become effective, and
(C) the date on which the books of the Corporation shall close or a record shall
be taken with respect to any such event. Such notice shall be accompanied by a
certificate prepared by the chief financial officer of the Corporation
describing in detail (1) the facts of such transaction, (2) the amount(s) per
share of Series B Preferred Stock each holder of Series B Preferred Stock would
receive pursuant to the applicable provisions of this Amended and Restated
Certificate of Incorporation, and (3) the facts upon which such amounts were
determined.
9.2 Adjustments; Calculations. Upon the occurrence of each adjustment
-------------------------
or readjustment of the Conversion Price pursuant to Section B.7, 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 B Preferred Stock a certificate setting forth in detail (i) such
adjustment or readjustment, (ii) the Conversion Price before and after such
adjustment or readjustment, and (iii) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of such holder"s shares of Series B Preferred Stock. All such
calculations shall be made to the nearest cent or to the nearest one hundredth
(1/100) of a share as the case may be.
9.3 Waiver of Notice. The holder or holders of a Majority Interest
----------------
may, at any time upon written notice to the Corporation, waive any notice or
certificate delivery provisions
27
<PAGE>
specified herein for the benefit of such holders, and any such waiver shall be
binding upon all holders of such securities.
Section 10. No Reissuance of Series B Preferred Stock. No share or
-----------------------------------------
shares of Series B Preferred Stock acquired by the Corporation by reason of
redemption, purchase, conversion or otherwise shall be reissued, and all such
shares shall be canceled, retired and eliminated from the shares which the
Corporation shall be authorized to issue.
Section 11. Contractual Rights of Holders. The various provisions set
-----------------------------
forth herein for the benefit of the holders of the Series B Preferred Stock
shall be deemed contract rights enforceable by them, including, without
limitation, one or more actions for specific performance.
C. Ranking.
-------
(a) Liquidation. The Series A Preferred Stock and the Series B
-----------
Preferred Stock shall rank on a parity with each other as to
liquidation rights. Except as otherwise stated in this Amended
and Restated Certificate of Incorporation, the Preferred Stock
shall be senior to all other classes of the Corporation's capital
stock as to liquidation rights.
(b) Dividends. No dividend shall be declared, paid or set apart
---------
on any Common Stock (other than a dividend payable in stock
ranking junior to the Series A Preferred Stock or Series B
Preferred Stock as to dividends and liquidation rights) at a time
at which any dividend on any Series A Preferred Stock or Series B
Preferred Stock then outstanding shall be past due unless all
past due dividends on the Series A Preferred Stock and Series B
Preferred Stock shall be paid or properly made available not
later than the time such dividend shall be paid on such junior
stock. The Series A Preferred Stock and the Series B Preferred
Stock shall rank pari passu as to the declaration and payment of
---- -----
dividends.
In the case of dividends or other distributions payable in stock
of the Corporation other than Series A Preferred Stock or Series
B Preferred Stock, including distributions pursuant to stock
splits or divisions of stock of the Corporation other than Series
A Preferred Stock or Series B Preferred Stock, which occur after
the initial issuance of shares of Series B Preferred Stock by the
Corporation, only shares of Common Stock shall be distributed
with respect to Common Stock, only shares of Series A Preferred
Stock shall be distributed with respect to Series A Preferred
Stock and only shares of Series B Preferred Stock shall be
distributed with respect to Series B Preferred Stock.
D. Common Stock.
------------
(a) Dividends. Subject to the preferential rights, if any, of the
---------
Preferred Stock, the holders of shares of Common Stock shall be entitled to
receive, when and if declared by the Board of Directors, out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property, or in shares of Common Stock.
28
<PAGE>
(b) Voting Rights. At every annual or special meeting of stockholders
-------------
of the Corporation, every holder of Common Stock shall be entitled to one vote,
in person or by proxy, for each share Common Stock outstanding in his name on
the books of the Corporation.
(c) Liquidation. In the event of any liquidation, after payment or
-----------
provision for payment of the debts and other liabilities of the Corporation and
of the preferential amounts, if any, to which the holders of Preferred Stock
shall be entitled, the holders of all outstanding shares of Common Stock shall
be entitled to share ratably in the remaining net assets of the Corporation.
FIFTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided that:
(a) Subject to the limitations and exceptions, if any, contained in the
by-laws of the Corporation, such by-laws may be adopted, amended or repealed by
the board of directors of the Corporation.
(b) Elections of directors need not be by written ballot unless, and only
to the extent, otherwise provided in the by-laws of the Corporation.
(c) Subject to any applicable requirements of law, the books of the
Corporation may be kept outside the State of Delaware at such location or
locations as may be designated by the board of directors of the Corporation or
in the by-laws of the Corporation.
(d) Except as provided to the contrary in the provisions establishing a
class of stock, the number of authorized shares of such class may be increased
or decreased (but not below the number of shares thereof then outstanding) by
the affirmative vote of the holders of a majority of stock of the Corporation
entitled to vote, voting as a single class.
SIXTH: The Corporation shall indemnify each person who at any time is, or
shall have been, a director or officer of the Corporation and was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director of
officer of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
incurred in connection with any such action, suit or proceeding, to the maximum
extent permitted by the General Corporation Law of the State of Delaware, as the
same exists or may hereafter be amended. The foregoing right of indemnification
shall in no way be exclusive of any other rights of indemnification to which any
such director or officer may be entitled, under any by-law, agreement, vote of
directors or stockholders or otherwise. No amendment to or repeal of the
provisions of this Article SIXTH shall deprive a director or officer of the
benefit hereof with respect to any act or failure to act occurring prior to such
amendment or repeal.
SEVENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them or between the Corporation
and its stockholders or any class of them, any court of equitable jurisdiction
within the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or
29
<PAGE>
stockholder thereof or on the application of any receiver or receivers appointed
for the Corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for the Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, or of the stockholders or class of stockholders
of the Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of the Corporation as a consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or to any of its stockholders for monetary damages arising out of
such director's breach of fiduciary duty as a director of the Corporation,
except to the extent that the elimination or limitation of such liability is not
permitted by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended. No amendment to or repeal of the provisions
of this Article EIGHTH shall deprive any director of the Corporation of the
benefit hereof with respect to any act or failure to act of such director
occurring prior to such amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Amended and Restated Certificate of
Incorporation in the manner now or hereafter prescribed by the General
Corporation Law of the State of Delaware and this Certificate of Incorporation,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
[SIGNATURE PAGE FOLLOWS]
30
<PAGE>
IN WITNESS WHEREOF, IPG Photonics Corporation has caused this Amended and
Restated Certificate of Incorporation to be signed by Valentin P. Gapontsev, its
President, this 25th day of August, 2000.
IPG PHOTONICS CORPORATION
By: /s/ Valentin P. Gapontsev
----------------------------------------
Valentin P. Gapontsev, President
31
