<PAGE> 1
EXHIBIT 3.1
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
QUANTUM BRIDGE COMMUNICATIONS, INC.
QUANTUM BRIDGE COMMUNICATIONS, INC., a corporation organized and existing
under the Delaware General Corporation Law (the "Corporation"), DOES HEREBY
CERTIFY that:
1. The name of the corporation was originally MetroWeb Technologies, Inc.,
and the original Certificate of Incorporation of the Corporation was filed with
the Secretary of State of the State of Delaware on October 22, 1998. On November
18, 1998, the Corporation filed a Certificate of Designation with the Secretary
of State of the State of Delaware and on January 14, 1999 the Corporation filed
an Amendment to its Certificate of Incorporation with the Secretary of State of
the State of Delaware changing its name to Quantum Bridge Communications, Inc.
On August 18, 1999, the Corporation filed an Amended and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware and on
December 23, 1999, the Corporation filed an Amendment to its Amended and
Restated Certificate of Incorporation.
2. This Second Amended and Restated Certificate of Incorporation amends and
restates the Amended and Restated Certificate of Incorporation of the
Corporation, as amended, and was duly adopted in accordance with the provisions
of Sections 242 and 245 of the General Corporation Law, and was approved by
written consent of the stockholders of the Corporation given in accordance with
the provisions of Section 228 of the General Corporation Law (prompt notice of
such action having been given to those stockholders who did not consent in
writing). The resolution setting forth the Second Amended and Restated
Certificate of Incorporation is as follows:
RESOLVED: That the Amended and Restated Certificate of Incorporation of the
Corporation, as amended, be and hereby is amended and restated in
its entirety so that the same shall read as follows:
FIRST. The name of the Corporation is: Quantum Bridge Communications, Inc.
SECOND. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
Development, manufacture, marketing and sales of telecommunications equipment
and engagement in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
1
<PAGE> 2
FOURTH. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 64,000,000 shares, consisting of
(i) 46,000,000 shares of Common Stock, $.001 par value per share ("Common
Stock"), and (ii) 18,000,000 shares of Preferred Stock, $.001 par value per
share ("Preferred Stock"). Of the 18,000,000 shares of authorized Preferred
Stock, 6,250,000 shares shall be designated and known as "Series A Convertible
Preferred Stock", 3,056,000 shares shall be designated and known as "Series B
Convertible Preferred Stock" and 7,579,449 shares shall be designated and known
as "Series C Convertible Preferred Stock."
The following is a statement of the designations and the powers, privileges
and rights, and the qualifications, limitations or restrictions thereof in
respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. GENERAL. The voting, dividend and liquidation rights of the holders of
the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. VOTING. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
The number of authorized shares of Common Stock 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 the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock from
funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
1. Preferred Stock may be issued from time to time in one or more series,
each of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue
2
<PAGE> 3
the Preferred Stock in one or more series, and in connection with the creation
of any such series, by resolution or resolutions providing for the issue of the
shares thereof, to determine and fix such voting powers, full or limited, or no
voting powers, and such designations, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, including without limitation thereof, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be stated and expressed in such resolutions, all to the full extent now or
hereafter permitted by the General Corporation Law of Delaware. Without limiting
the generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or rank
equally or be junior to the Preferred Stock of any other series to the extent
permitted by law. Except as otherwise provided in this Certificate of
Incorporation, no vote of the holders of the Preferred Stock or Common Stock
shall be a prerequisite to the designation or issuance of any shares of any
series of the Preferred Stock authorized by and complying with the conditions of
this Certificate of Incorporation, the right to have such vote being expressly
waived by all present and future holders of the capital stock of the
Corporation.
C. SERIES A CONVERTIBLE PREFERRED STOCK, SERIES B CONVERTIBLE PREFERRED STOCK
AND SERIES C CONVERTIBLE PREFERRED STOCK.
1. The Series A Convertible Preferred Stock, the Series B Convertible
Preferred Stock and the Series C Convertible Preferred Stock (collectively, the
"Series Preferred Stock") shall have the following rights and preferences:
2. VOTING. Except as may be otherwise provided in these terms of Preferred
Stock or by law, the Series Preferred Stock shall vote together with all other
classes and series of stock of the Corporation as a single class on all actions
to be taken by the stockholders of the Corporation, including, but not limited
to actions amending the Certificate of Incorporation of the Corporation to
increase the number of authorized shares of Common Stock. Each share of Series
Preferred Stock shall entitle the holder thereof to such number of votes per
share on each such action as shall equal the number of shares of Common Stock
(including fractions of a share) into which each share of Series Preferred Stock
is then convertible.
3. DIVIDENDS. The holders of Preferred Stock shall be entitled to receive,
out of funds legally available therefor, when, as and if declared by the Board
of Directors, quarterly dividends at the rate per annum of (i) $0.08 per share
(subject to equitable adjustment for any stock dividend, subdivision,
combination, reclassification or other event affecting the number of outstanding
shares of Series A Preferred Stock) as to shares of Series A Convertible
Preferred Stock, (ii) $0.42 per share (subject to equitable adjustment for any
stock dividend, subdivision, combination, reclassification or other event
affecting the number of outstanding shares of Series B Preferred Stock) as to
shares of Series B Convertible Preferred Stock, and (iii) $1.0824 per share
(subject to equitable adjustment for any stock dividend, subdivision,
combination, reclassification or other event affecting the number of outstanding
shares of Series C Preferred Stock) as to shares of Series C Convertible
Preferred Stock (collectively, the "Accruing Dividends"). Accruing Dividends
shall accrue from day to day, whether or not earned or declared, and shall be
cumulative. All Accruing Dividends paid pursuant to this Section 3 on shares of
Series Preferred Stock shall rank pari passu, and no class of Series Preferred
Stock shall receive, either paid or declared, any Accruing Dividends pursuant to
this Section 3 exclusive of the other class. The Corporation shall not declare
or pay any cash dividends on
3
<PAGE> 4
shares of Common Stock until the holders of the Series Preferred Stock then
outstanding shall have first received, or simultaneously receive, a cash
dividend on each outstanding share of Series Preferred Stock in an amount at
least equal to the product of (i) the per share amount, if any, of the dividends
or other distributions to be declared, paid or set aside for the Common Stock,
multiplied by (ii) the number of whole shares of Common Stock into which such
share of Series Preferred Stock is then convertible.
4. LIQUIDATION. Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the shares of
Series Preferred Stock shall first be entitled, before any distribution or
payment is made upon any stock ranking on liquidation junior to the Series
Preferred Stock, to be paid an amount equal to the greater of (i) such amount
per share as would have been payable had each such share been converted into
Common Stock pursuant to Section 6 immediately prior to any such liquidation,
dissolution or winding up of the Corporation and (ii) the Original Issue Price
per share (appropriately adjusted for stock splits, stock dividends and the
like) plus, in the case of each share, an amount equal to all Accruing Dividends
unpaid thereon (whether or not declared) and any other dividends declared but
unpaid thereon, computed to the date payment thereof is made available, such
amount payable with respect to one share of Series Preferred Stock being
sometimes referred to as the "Liquidation Preference Payment" and with respect
to all shares of Series Preferred Stock being sometimes referred to as the
"Liquidation Preference Payments". The amounts payable pursuant to sections (i)
and (ii) above shall be paid to the holders in cash or Marketable Securities at
the holders election, or, if the holders elect, in some other form of
consideration. "Marketable Securities" means (a) securities listed on a national
exchange or quoted on the NASDAQ National Market System, (b) investment grade
securities, (c) securities with maturities of one year or less from the date of
acquisition, issued, fully guaranteed or insured by the United States Government
or any agency thereof, (d) certificates of deposit, time deposits, overnight
bank deposits, bankers' acceptances and repurchase agreements issued by a
Qualified Issuer having maturities of 270 days or less from the date of
acquisition, (e) commercial paper of an issuer rated at least A-2 by Standard &
Poor's Corporation or P-2 by Moody's Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency if both of the two
named rating agencies cease publishing ratings of investments, and having
maturities of 270 days or less from the date of acquisition, and (f) money
market accounts or funds with or issued by Qualified Issuers. "Qualified Issuer"
means (a) any lender that is a party to any Credit Agreement, and (b) any
commercial bank (i) which has capital stock and surplus in excess of
$100,000,000, and (ii) the outstanding short-term debt securities of which are
rated at least A-2 by Standard & Poor's Corporation or at least P-2 by Moody's
Investors Service, Inc. The Original Issue Price for the Series A Convertible
Preferred Stock is $1.00 per share, the Original Issue Price for the Series B
Convertible Preferred Stock is $5.2356 per share and the Original Issue Price
for the Series C Convertible Preferred Stock is $13.53 per share. If upon such
liquidation, dissolution or winding up of the Corporation, whether voluntary or
involuntary, the assets to be distributed among the holders of Series Preferred
Stock shall be insufficient to permit payment in full to the holders of Series
Preferred Stock of the Liquidation Preference Payments, then the entire assets
of the Corporation to be so distributed shall be distributed ratably among the
holders of Series Preferred Stock in accordance with the preferential amounts
each series is otherwise entitled to receive. Upon any such liquidation,
dissolution or winding up of the Corporation, immediately after the holders of
Series Preferred Stock shall have been paid in full the Liquidation Preference
Payments (if applicable), the remaining net assets of the Corporation available
for distribution
4
<PAGE> 5
shall be distributed ratably among the holders of Common Stock. Written notice
of such liquidation, dissolution or winding up, stating a payment date, the
amount of the Liquidation Preference Payments and the place where said
Liquidation Preference Payments shall be payable, shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, not less than 20 days prior to the payment date stated
therein, to the holders of record of Series Preferred Stock, such notice to be
addressed to each such holder at its address as shown by the records of the
Corporation. The consolidation or merger of the Corporation into or with any
other entity or entities which results in the exchange of outstanding shares of
the Corporation for securities or other consideration issued or paid or caused
to be issued or paid by any such entity or affiliate thereof (other than a
merger to reincorporate the Corporation in a different jurisdiction), or the
sale, lease, abandonment, transfer or other disposition by the Corporation of
all or substantially all its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of the
provisions of this paragraph 4. For purposes hereof, the Series A Convertible
Preferred Stock, the Series B Convertible Preferred Stock and the Series C
Convertible Preferred Stock shall rank pari passu with each other and the Common
Stock shall rank on liquidation junior to the Series Preferred Stock.
5. RESTRICTIONS. Except where the vote or written consent of the holders of
a greater number of shares of the Corporation is required by law or by the
Second Amended and Restated Certificate of Incorporation (the "Charter"), and in
addition to any other vote required by law or the Charter, without the approval
of (a) the holders of at least two-thirds of the then outstanding shares of
Series Preferred Stock, consenting or voting (as the case may be) together as a
single class, and (b) and the holders of at least a majority of the then
outstanding shares of Series C Convertible Preferred Stock, in each case, given
in writing or by vote at a meeting, the Corporation will not:
5A. Create or authorize the creation of any additional class or series
of shares of stock ranking senior to any Series Preferred Stock as to
redemption, or dividends or as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or increase the authorized amount
of any additional class or series of shares of stock ranking senior to any
Series Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize any
obligation or security convertible into shares of any class or series of stock
ranking senior to any Series Preferred Stock as to the distribution of assets on
the liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Charter or by merger, consolidation or otherwise;
5B. Consent to any liquidation, dissolution or winding up of the
Corporation or consolidate or merge into or with any other entity or entities or
sell, lease, abandon, transfer or otherwise dispose of all or substantially all
its assets;
5C. Amend, alter or repeal the Charter or the Corporation's By-Laws in
a manner adverse to holders of the Series Preferred Stock provided, however,
that notwithstanding any other provisions herein, the creation or authorization
of any shares of capital stock on a parity with or junior to any Series
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding-up of the corporation
shall not require approval of the holders of the Series Preferred Stock;
5
<PAGE> 6
5D. Declare, purchase or set aside any sums for the purchase of, or pay
any dividend or make any distribution on, any shares of stock other than
preferred stock of the Corporation in accordance with the terms of such
preferred stock, except for dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock and except
for the purchase of shares of Common Stock (i) from employees or former
employees of the Corporation who acquired such shares directly from the
Corporation, if each such purchase is made pursuant to contractual rights held
by the Corporation relating to the termination of employment of such former
employee and the purchase price does not exceed the original issue price paid by
such former employee to the Corporation for such shares or (ii) pursuant to a
right of first refusal contained in an option agreement with any employee or
former employee pursuant to the terms thereof or a restricted stock agreement
with any employee or former employee pursuant to the terms thereof; or
5E. Redeem or otherwise acquire any shares of capital stock or
convertible securities except as expressly authorized in paragraph 7 hereof or
as contemplated in paragraph 5D hereof.
Notwithstanding the foregoing, no vote or consent will be required pursuant to
this paragraph 5: (i) by the holders of Series A Convertible Preferred Stock as
of the first date on which less than 2,000,000 shares of Series A Convertible
Preferred Stock are outstanding (appropriately adjusted for stock splits, stock
dividends and the like), (ii) by the holders of Series B Convertible Preferred
Stock as of the first date on which less than 1,000,000 shares of the Series B
Convertible Preferred Stock are outstanding (appropriately adjusted for stock
splits, stock dividends and the like), and (iii) by the holders of Series C
Convertible Preferred Stock as of the first date on which less than 2,600,000
shares of Series C Preferred Stock are outstanding (appropriately adjusted for
stock splits, stock dividends and the like), and the two-thirds vote requirement
set forth above shall only apply to the class or classes of Preferred Stock
actually voting or consenting, as the case may be.
6. CONVERSIONS. The holders of shares of Series Preferred Stock shall have
the following conversion rights:
6A. RIGHT TO CONVERT. Subject to the terms and conditions of this
paragraph 6, the holder of any share or shares of Series Preferred Stock shall
have the right, at its option at any time, to convert any such shares of Series
Preferred Stock (except that upon any liquidation of the Corporation the right
of conversion shall terminate at the close of business on the third full
business day immediately preceding the date fixed for payment of the amount
distributable on the Series Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained (a) in the case of Series A
Convertible Preferred Stock, by (i) multiplying the number of shares of Series A
Convertible Preferred Stock so to be converted by $1.00 and (ii) dividing the
result by the conversion price of $.50 per share or, in case an adjustment of
such price has taken place after April 6, 2000 pursuant to the further
provisions of this paragraph 6, then by the conversion price as last adjusted
and in effect at the date any share or shares of Series A Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Series A Conversion Price"), or (b) in the
case of Series B Convertible Preferred Stock, by (i) multiplying the number of
shares of Series B Convertible Preferred Stock so to be converted by $5.2356 and
(ii) dividing the result by the conversion price of $2.6178 per share or, in
case an adjustment of such price has taken place after April 6, 2000
6
<PAGE> 7
pursuant to the further provisions of this paragraph 6, then by the conversion
price as last adjusted and in effect at the date any share or shares of Series B
Convertible Preferred Stock are surrendered for conversion (such price, or such
price as last adjusted, being referred to as the "Series B Conversion Price") or
(c) in the case of Series C Convertible Preferred Stock, by (i) multiplying the
number of shares of Series C Convertible Preferred Stock to be converted by
$13.53 and (ii) dividing the result by the conversion price of $13.53 per share
or, in case an adjustment of such price has taken place pursuant to the further
provisions of this paragraph 6, then by the conversion price as last adjusted
and in effect at the date any share or shares of Series C Convertible Preferred
Stock are surrendered for conversion (such price, or such price as last
adjusted, being referred to as the "Series C Conversion Price"). Such rights of
conversion shall be exercised by the holder thereof by giving written notice
that the holder elects to convert a stated number of shares of Series Preferred
Stock into Common Stock and by surrender of a certificate or certificates for
the shares so to be converted to the Corporation at its principal office (or
such other office or agency of the Corporation as the Corporation may designate
by notice in writing to the holders of the Series Preferred Stock) at any time
during its usual business hours on the date set forth in such notice, together
with a statement of the name or names (with address) in which the certificate or
certificates for shares of Common Stock shall be issued.
6B. ISSUANCE OF CERTIFICATES; TIME CONVERSION EFFECTED. Promptly after
the receipt of the written notice referred to in subparagraph 6A and surrender
of the certificate or certificates for the share or shares of Series Preferred
Stock to be converted, the Corporation shall issue and deliver, or cause to be
issued and delivered, to the holder, registered in such name or names as such
holder may direct, a certificate or certificates for the number of whole shares
of Common Stock issuable upon the conversion of such share or shares of Series
Preferred Stock. To the extent permitted by law, such conversion shall be deemed
to have been effected and the Series A Conversion Price, Series B Conversion
Price and/or Series C Conversion Price, as the case may be, shall be determined
as of the close of business on the date on which such written notice shall have
been received by the Corporation and the certificate or certificates for such
share or shares shall have been surrendered as aforesaid, and at such time the
rights of the holder of such share or shares of Series Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
6C. FRACTIONAL SHARES; DIVIDENDS; PARTIAL CONVERSION. No fractional
shares shall be issued upon conversion of Series Preferred Stock into Common
Stock and no payment or adjustment shall be made upon any conversion on account
of any cash dividends on the Common Stock issued upon such conversion. At the
time of each conversion, the Corporation shall pay in cash an amount equal to
all dividends, excluding Accruing Dividends, accrued and unpaid on the shares of
Series Preferred Stock surrendered for conversion to the date upon which such
conversion is deemed to take place as provided in subparagraph 6B. In case the
number of shares of Series Preferred Stock represented by the certificate or
certificates surrendered pursuant to subparagraph 6A exceeds the number of
shares converted, the Corporation shall, upon such conversion, execute and
deliver to the holder, at the expense of the Corporation, a new certificate or
certificates for the shares of Series Preferred Stock represented by the
certificate or certificates surrendered which are not to be converted. If any
fractional share of Common Stock would,
7
<PAGE> 8
except for the provisions of the first sentence of this subparagraph 6C, be
delivered upon such conversion, the Corporation, in lieu of delivering such
fractional share, shall pay to the holder surrendering the Series Preferred
Stock for conversion an amount in cash equal to the current market price of such
fractional share as determined in good faith by the Board of Directors of the
Corporation.
6D. ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. Except as
provided in subparagraph 6E, if and whenever the Corporation shall issue or
sell, or is, in accordance with subparagraphs 6D(1) through 6D(7), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the Series A Conversion Price, Series B Conversion Price and/or Series
C Conversion Price, as the case may be (the "Applicable Conversion Price"), in
effect immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale, the Applicable Conversion Price shall be reduced to the
price determined by dividing (i) an amount equal to the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the then existing Applicable Conversion Price and (b) the
consideration, if any, received by the Corporation upon such issue or sale, by
(ii) the total number of shares of Common Stock outstanding immediately after
such issue or sale PROVIDED THAT, for the purpose of this Subsection 6D, all
shares of Common Stock issuable upon exercise or conversion of options or
convertible securities outstanding immediately prior to such issue shall be
deemed to be outstanding.
For purposes of this subparagraph 6D, the following subparagraphs 6D(1) to
6D(7) shall also be applicable:
6D(1) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the
Corporation shall 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 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")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities (determined
by dividing (i) 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 (ii) the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be
less than the Series A Conversion Price, the Series B Conversion Price or
the Series C Conversion Price, as the case may be, in effect immediately
prior to the time of the granting of such Options, 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 the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of
8
<PAGE> 9
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding. Except as otherwise provided
in subparagraph 6D(3), no adjustment of the Series A Conversion Price, the
Series B Conversion Price or the Series C 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.
6D(2) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) 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 (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Series A Conversion Price,
Series B Conversion Price or Series C Conversion Price, as the case may be,
in effect immediately prior to the time of such issue or sale, 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 for such price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be outstanding,
provided that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Series A Conversion Price, Series B Conversion Price or
Series C Conversion Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities and
(b) if any such issue or sale of such Convertible Securities is made upon
exercise of any Options to purchase any such Convertible Securities for
which adjustments of the Series A Conversion Price, Series B Conversion
Price or Series C Conversion Price have been or are to be made pursuant to
other provisions of this subparagraph 6D, no further adjustment of the
Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price shall be made by reason of such issue or sale.
6D(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any Option referred to in subparagraph 6D(1), the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in subparagraph 6D(1) or 6D(2), or the rate at which
Convertible Securities referred to in subparagraph 6D(1) or 6D(2) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Series A Conversion Price,
Series B Conversion Price and/or Series C Conversion Price in effect at the
time of such event shall forthwith be readjusted to the Series A Conversion
Price, Series B Conversion Price or Series C Conversion Price, as the case
may be, which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at
the time initially granted, issued or sold; and on the termination of any
such Option or any
9
<PAGE> 10
such right to convert or exchange such Convertible Securities, the Series A
Conversion Price, Series B Conversion Price and/or Series C Conversion
Price then in effect hereunder shall forthwith be increased to the Series A
Conversion Price, Series B Conversion or Series C Conversion Price, as the
case may be, which would have been in effect at the time of such
termination had such Option or Convertible Securities, to the extent
outstanding immediately prior to such termination, never been issued.
6D(4) STOCK DIVIDENDS. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
(other than the Common Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
6D(5) CONSIDERATION FOR STOCK. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for a
consideration other 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 as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. 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.
6D(6) RECORD DATE. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) 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.
6D(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, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of
this subparagraph 6D.
6E. CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Series A Conversion Price, Series B Conversion Price or Series
C Conversion Price in the case of the issuance, from and after the date of
filing of these terms of the Series Preferred Stock, of
10
<PAGE> 11
shares of Common Stock issued or issuable to employees or directors of, or
consultants or advisors to, the Corporation pursuant to a plan or arrangement
approved by the Board of Directors of the Corporation and by a majority of the
members of the Board of Directors who are not employees of the Corporation.
Notwithstanding the foregoing, the Corporation shall not increase the number of
shares of Common Stock reserved for issuance pursuant to any plan or arrangement
approved by the Board of Directors and as in effect on the date hereof, without
the approval of a majority of the members of the Board of Directors who are not
employees of the Corporation.
6F. SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the Corporation
shall at any time subdivide (by any stock split, stock dividend or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Series A Conversion Price, Series B Conversion Price and/or Series C 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 Series A Conversion Price,
Series B Conversion Price or Series C 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 subparagraph
6D(4) by reason thereof.
6G. 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
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 Preferred Stock, 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 Series A Conversion Price, Series B Conversion
Price and/or Series C 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.
6H. FAILURE TO REDEEM. If the Corporation fails, for any reason or for
no reason, to redeem on any Redemption Date (as defined in paragraph 7) all of
the then outstanding shares of Series Preferred Stock required to be redeemed on
such Redemption Date in accordance with the terms and conditions of paragraph 7,
the Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price, as the case may be, then in effect shall be immediately reduced by an
amount equal to 8% thereof. Thereafter, until such redemption has been made in
full in accordance with such terms and conditions, the Series A Conversion
Price, Series B Conversion Price or Series C Conversion Price, as the case may
be, shall be further reduced on the 90th day following the Redemption Date and
at the end of each 90-day period thereafter by an amount equal to 8% of the
Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price, as the case may be, in effect immediately prior to
11
<PAGE> 12
each such reduction.
6I. NOTICE OF ADJUSTMENT. Upon any adjustment of the Series A
Conversion Price, Series B Conversion Price or Series C Conversion Price, then
and in each such case the Corporation shall give written notice thereof, by
delivery in person, certified or registered mail, return receipt requested,
telecopier or telex, addressed to each holder of shares of Series A Convertible
Preferred Stock, Series B Convertible Preferred Stock or Series C Convertible
Preferred Stock, as applicable, at the address of such holder as shown on the
books of the Corporation, which notice shall state the conversion price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
6J. OTHER NOTICES. In case at any time:
(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription PRO RATA to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with or into another entity or entities, or a sale, lease,
abandonment, transfer or other disposition of all or substantially all its
assets; or
(4) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier or
telex, addressed to each holder of any shares of Series Preferred Stock at the
address of such holder as shown on the books of the Corporation, (a) at least 20
days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the foregoing
clause (b) shall also specify the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may be.
6K. STOCK TO BE RESERVED. The Corporation will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series Preferred Stock as herein provided, such
number of shares of Common
12
<PAGE> 13
Stock as shall then be issuable upon the conversion of all outstanding shares of
Series Preferred Stock. The Corporation covenants that all shares of Common
Stock which shall be so issued shall be duly and validly issued and fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, and, without limiting the generality of the foregoing, the
Corporation covenants that it will from time to time take all such action as may
be requisite to assure that the par value per share of the Common Stock is at
all times equal to or less than the Series A Conversion Price, Series B
Conversion Price or Series C Conversion Price, as the case may be, in effect at
the time. The Corporation will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirement of any national
securities exchange upon which the Common Stock may be listed. The Corporation
will not take any action which results in any adjustment of the Series A
Conversion Price, Series B Conversion Price or Series C Conversion Price if the
total number of shares of Common Stock issued and issuable after such action
upon conversion of the Series Preferred Stock would exceed the total number of
shares of Common Stock then authorized by the Charter.
6L. NO REISSUANCE OF SERIES PREFERRED STOCK. Shares of Series
Preferred Stock which are converted into shares of Common Stock as provided
herein shall not be reissued.
6M. ISSUE TAX. The issuance of certificates for shares of Common Stock
upon conversion of Series Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Series Preferred Stock which is being
converted.
6N. CLOSING OF BOOKS. The Corporation will at no time close its
transfer books against the transfer of any Series Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Series Preferred Stock in any manner which interferes with the timely conversion
of such Series Preferred Stock, except as may otherwise be required to comply
with applicable securities laws.
6O. DEFINITION OF COMMON STOCK. As used in this paragraph 6, the term
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
par value $.001 per share, as constituted on the date of filing of these terms
of the Preferred Stock, or in case of any reorganization or reclassification of
the outstanding shares thereof, the stock, securities or assets provided for in
subparagraph 6G.
6P. MANDATORY CONVERSION. At any time the Corporation shall effect an
underwritten public offering of shares of Common Stock which is listed on a
national exchange or quoted on the NASDAQ National Market System in which (i)
the aggregate price paid for such shares by the public shall be at least
$50,000,000 and (ii) the price paid by the public for such shares shall be at
least $27.06 per share (appropriately adjusted to reflect the occurrence of any
event described in subparagraph 6F), then effective upon the closing of the sale
of such shares by the Corporation pursuant to such public offering, all
outstanding shares of Series Preferred Stock shall automatically convert to
shares of Common Stock on the basis set forth in this paragraph 6. In addition,
effective on the fifth day after receipt by the Secretary of the Corporation of
written election of conversion by (i) the holders of at least two-thirds of the
then
13
<PAGE> 14
outstanding shares of Series A Convertible Preferred Stock, all shares of Series
A Convertible Preferred Stock shall automatically convert; (ii) the holders of
at least two-thirds of the then outstanding shares of Series B Convertible
Preferred Stock, all shares of Series B Convertible Preferred Stock shall
automatically convert; or (iii) the holders of at least two-thirds of the then
outstanding shares of Series C Convertible Stock, all shares of Series C
Convertible Preferred Stock shall automatically convert. Holders of shares of
Series Preferred Stock so converted may deliver to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to such holders) during its usual
business hours, the certificate or certificates for the shares so converted. As
promptly as practicable thereafter, the Corporation shall issue and deliver to
such holder a certificate or certificates for the number of whole shares of
Common Stock to which such holder is entitled, together with any cash dividends
and payment in lieu of fractional shares to which such holder may be entitled
pursuant to subparagraph 6C. Until such time as a holder of shares of Series
Preferred Stock shall surrender his or its certificates therefor as provided
above, such certificates shall be deemed to represent the shares of Common Stock
to which such holder shall be entitled upon the surrender thereof.
7. REDEMPTION. The shares of Series Preferred Stock shall be redeemed as
follows:
7A. MANDATORY REDEMPTION. On August 18, 2006, and on each of the next
two anniversaries thereafter (the "Redemption Dates", and each a "Redemption
Date"), the Corporation shall redeem any outstanding shares of Series Preferred
Stock according to the percentages listed below:
Percentage of Shares of
Series Preferred Stock then
Date of Redemption Outstanding to be Redeemed
------------------ ----------------------------
August 18, 2006 33-1/3% of all the shares of each series of Series
Preferred Stock Outstanding on August 18, 2006
August 18, 2007 50% of all the shares of each series of Series
Preferred Stock outstanding on August 18, 2007
August 18, 2008 100% of all the shares of each series of Series
Preferred Stock outstanding on August 18, 2008
7B. REDEMPTION PRICE AND PAYMENT. The shares of Series Preferred Stock
to be redeemed on any Redemption Date shall be redeemed by paying for each share
in cash an
14
<PAGE> 15
amount equal to the Original Issue Price per share plus, in the case of each
share, an amount equal to all Accruing Dividends unpaid thereon (whether or not
declared), and any other dividends declared but unpaid thereon, computed to such
Redemption Date, such amount being referred to as the "Redemption Price". Such
payment shall be made in full on the applicable Redemption Date to the holders
entitled thereto.
7C. REDEMPTION MECHANICS. At least 10 but not more than 40 days prior
to each Redemption Date, written notice (the "Redemption Notice") shall be given
by the Corporation by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, to each holder of record (at the close
of business on the business day next preceding the day on which the Redemption
Notice is given) of shares of Series Preferred Stock notifying such holder of
the redemption and specifying the Redemption Price, such Redemption Date, the
number of shares of each series of Series Preferred Stock to be redeemed from
such holder (computed on a pro rata basis in accordance with the number of such
shares held by all holders thereof) and the place where said Redemption Price
shall be payable. The Redemption Notice shall be addressed to each holder at his
address as shown by the records of the Corporation. From and after the close of
business on a Redemption Date, unless there shall have been a default in the
payment of the Redemption Price, all rights of holders of shares of Series
Preferred Stock (except the right to receive the Redemption Price) shall cease
with respect to the shares to be redeemed on such Redemption Date, and such
shares shall not thereafter be transferred on the books of the Corporation or be
deemed to be outstanding for any purpose whatsoever. If the funds of the
Corporation legally available for redemption of shares of Series Preferred Stock
on a Redemption Date are insufficient to redeem the total number of shares of
Series Preferred Stock to be redeemed on such Redemption Date, the holders of
such shares shall share ratably in any funds legally available for redemption of
such shares according to the respective amounts which would be payable to them
if the full number of shares to be redeemed on such Redemption Date were
actually redeemed. The shares of Series Preferred Stock required to be redeemed
but not so redeemed shall remain outstanding and entitled to all rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Series
Preferred Stock, such funds will be used, at the end of the next succeeding
fiscal quarter, to redeem the balance of such shares, or such portion thereof
for which funds are then legally available, on the basis set forth above.
7D. REDEEMED OR OTHERWISE ACQUIRED SHARES TO BE RETIRED. Any shares of
Series Preferred Stock redeemed pursuant to this paragraph 7 or otherwise
acquired by the Corporation in any manner whatsoever shall be canceled and shall
not under any circumstances be reissued; and the Corporation may from time to
time take such appropriate corporate action as may be necessary to reduce
accordingly the number of authorized shares of Series Preferred Stock.
8. AMENDMENTS. Except as provided in paragraph 5C, no provision of these
terms of the Series Preferred Stock may be amended, modified or waived without
the written consent or affirmative vote of the holders of at least two-thirds of
the then outstanding shares of Series Preferred Stock, voting together as a
single class.
15
<PAGE> 16
FIFTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or repeal
the By-Laws of the Corporation.
SIXTH. Except to the extent that the General Corporation Law of Delaware
prohibits the elimination or limitation of liability of directors for breaches
of fiduciary duty, no director of the Corporation shall be personally liable to
the Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a director, notwithstanding any provision of law imposing such
liability. No amendment to or repeal of this provision shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
SEVENTH.
1. ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE
CORPORATION. The Corporation shall indemnify each person who 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 (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was, or has agreed to become, a director or
officer of the Corporation, or is or was serving, or has agreed to serve, at the
request of the Corporation, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such action, suit
or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. Notwithstanding
anything to the contrary in this Article, except as set forth in Section 7
below, the Corporation shall not indemnify an Indemnitee seeking indemnification
in connection with a proceeding (or part thereof) initiated by the Indemnitee
unless the initiation thereof was approved by the Board of Directors of the
Corporation. Notwithstanding anything to the contrary in this Article, the
Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is
reimbursed from the proceeds of insurance, and in the event the Corporation
makes any indemnification payments to an Indemnitee and such Indemnitee is
subsequently reimbursed from the proceeds of insurance, such Indemnitee shall
promptly refund such indemnification payments to the Corporation to the extent
of such insurance reimbursement.
16
<PAGE> 17
2. ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION. The Corporation
shall indemnify any Indemnitee who was or is a party or is threatened to be made
a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer or trustee of, or in a similar capacity
with, another corporation, partnership, joint venture, trust or other enterprise
(including any employee benefit plan), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees) and, to the extent permitted by law, amounts paid in settlement
actually and reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
(including attorneys' fees) which the Court of Chancery of Delaware shall deem
proper.
3. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the
other provisions of this Article, to the extent that an Indemnitee has been
successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 1 and 2 of this Article, or in defense of any
claim, issue or matter therein, or on appeal from any such action, suit or
proceeding, he shall be indemnified against all expenses (including attorneys'
fees) actually and reasonably incurred by him or on his behalf in connection
therewith. Without limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition without
prejudice), without (i) the disposition being adverse to the Indemnitee, (ii) an
adjudication that the Indemnitee was liable to the Corporation, (iii) a plea of
guilty or NOLO CONTENDERE by the Indemnitee, (iv) an adjudication that the
Indemnitee did not act in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and (v) with
respect to any criminal proceeding, an adjudication that the Indemnitee had
reasonable cause to believe his conduct was unlawful, the Indemnitee shall be
considered for the purposes hereof to have been wholly successful with respect
thereto.
4. NOTIFICATION AND DEFENSE OF CLAIM. As a condition precedent to his right
to be indemnified, the Indemnitee must notify the Corporation in writing as soon
as practicable of any action, suit, proceeding or investigation involving him
for which indemnity will or could be sought. With respect to any action, suit,
proceeding or investigation of which the Corporation is so notified, the
Corporation will be entitled to participate therein at its own expense and/or to
assume the defense thereof at its own expense, with legal counsel reasonably
acceptable to the Indemnitee. After notice from the Corporation to the
Indemnitee of its election so to assume such defense, the Corporation shall not
be liable to the Indemnitee for any legal or other expenses subsequently
incurred by the Indemnitee in connection with such claim, other than as provided
below in this Section 4. The Indemnitee shall have the right to employ his own
counsel in connection with such claim, but the fees and expenses of such counsel
incurred after notice from the Corporation of its assumption of the defense
thereof shall be at the expense of the Indemnitee unless (i) the employment of
counsel by the Indemnitee has been authorized by the
17
<PAGE> 18
Corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that
there may be a conflict of interest or position on any significant issue between
the Corporation and the Indemnitee in the conduct of the defense of such action
or (iii) the Corporation shall not in fact have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
for the Indemnitee shall be at the expense of the Corporation, except as
otherwise expressly provided by this Article. The Corporation shall not be
entitled, without the consent of the Indemnitee, to assume the defense of any
claim brought by or in the right of the Corporation or as to which counsel for
the Indemnitee shall have reasonably made the conclusion provided for in clause
(ii) above.
5. ADVANCE OF EXPENSES. Subject to the provisions of Section 6 below, in
the event that the Corporation does not assume the defense pursuant to Section 4
of this Article of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses (including
attorneys' fees) incurred by an Indemnitee in defending a civil or criminal
action, suit, proceeding or investigation or any appeal therefrom shall be paid
by the Corporation in advance of the final disposition of such matter; PROVIDED,
HOWEVER, that the payment of such expenses incurred by an Indemnitee in advance
of the final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of the Indemnitee to repay all amounts so advanced
in the event that it shall ultimately be determined that the Indemnitee is not
entitled to be indemnified by the Corporation as authorized in this Article.
Such undertaking shall be accepted without reference to the financial ability of
the Indemnitee to make such repayment.
6. PROCEDURE FOR INDEMNIFICATION. In order to obtain indemnification or
advancement of expenses pursuant to Section 1, 2, 3 or 5 of this Article, the
Indemnitee shall submit to the Corporation a written request, including in such
request such documentation and information as is reasonably available to the
Indemnitee and is reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification or advancement of expenses. Any
such indemnification or advancement of expenses shall be made promptly, and in
any event within 60 days after receipt by the Corporation of the written request
of the Indemnitee, unless with respect to requests under Section 1, 2 or 5 the
Corporation determines within such 60-day period that the Indemnitee did not
meet the applicable standard of conduct set forth in Section 1 or 2, as the case
may be. Such determination shall be made in each instance by (a) a majority vote
of the directors of the Corporation consisting of persons who are not at that
time parties to the action, suit or proceeding in question ("disinterested
directors"), whether or not a quorum, (b) a majority vote of a quorum of the
outstanding shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of stockholders who are not
at that time parties to the action, suit or proceeding in question, (c)
independent legal counsel (who may, to the extent permitted by law, be regular
legal counsel to the Corporation), or (d) a court of competent jurisdiction.
7. REMEDIES. The right to indemnification or advances as granted by this
Article shall be enforceable by the Indemnitee in any court of competent
jurisdiction if the Corporation denies such request, in whole or in part, or if
no disposition thereof is made within the 60-day period referred to above in
Section 6. Unless otherwise required by law, the burden of proving that the
Indemnitee is not entitled to indemnification or advancement of expenses under
this Article shall be on the Corporation. Neither the failure of the Corporation
to have made a determination prior to the commencement of such action that
indemnification is proper in the
18
<PAGE> 19
circumstances because the Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Corporation pursuant to Section 6 that the
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the Indemnitee has not met the
applicable standard of conduct. The Indemnitee's expenses (including attorneys'
fees) incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such proceeding shall also be
indemnified by the Corporation.
8. SUBSEQUENT AMENDMENT. No amendment, termination or repeal of this
Article or of the relevant provisions of the General Corporation Law of Delaware
or any other applicable laws shall affect or diminish in any way the rights of
any Indemnitee to indemnification under the provisions hereof with respect to
any action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the final adoption of such
amendment, termination or repeal.
9. OTHER RIGHTS. The indemnification and advancement of expenses provided
by this Article shall not be deemed exclusive of any other rights to which an
Indemnitee seeking indemnification or advancement of expenses may be entitled
under any law (common or statutory), agreement or vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in any other capacity while holding office for the Corporation,
and shall continue as to an Indemnitee who has ceased to be a director or
officer, and shall inure to the benefit of the estate, heirs, executors and
administrators of the Indemnitee. Nothing contained in this Article shall be
deemed to prohibit, and the Corporation is specifically authorized to enter
into, agreements with officers and directors providing indemnification rights
and procedures different from those set forth in this Article. In addition, the
Corporation may, to the extent authorized from time to time by its Board of
Directors, grant indemnification rights to other employees or agents of the
Corporation or other persons serving the Corporation and such rights may be
equivalent to, or greater or less than, those set forth in this Article.
10. PARTIAL INDEMNIFICATION. If an Indemnitee is entitled under any
provision of this Article to indemnification by the Corporation for some or a
portion of the expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by him or on his behalf in
connection with any action, suit, proceeding or investigation and any appeal
therefrom but not, however, for the total amount thereof, the Corporation shall
nevertheless indemnify the Indemnitee for the portion of such expenses
(including attorneys' fees), judgments, fines or amounts paid in settlement to
which the Indemnitee is entitled.
11. INSURANCE. The Corporation may purchase and maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise (including any employee benefit plan) against any expense, liability
or loss incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify such
person against such expense, liability or loss under the General Corporation Law
of Delaware.
12. MERGER OR CONSOLIDATION. If the Corporation is merged into or
consolidated with another corporation and the Corporation is not the surviving
corporation, the surviving corporation shall assume the obligations of the
Corporation under this Article with respect to any
19
<PAGE> 20
action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the date of such merger or
consolidation.
13. SAVINGS CLAUSE. If this Article or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Indemnitee as to any expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with any action, suit, proceeding or investigation, whether civil,
criminal or administrative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of this
Article that shall not have been invalidated and to the fullest extent permitted
by applicable law.
14. DEFINITIONS. Terms used herein and defined in Section 145(h) and
Section 145(i) of the General Corporation Law of Delaware shall have the
respective meanings assigned to such terms in such Section 145(h) and Section
145(i).
15. SUBSEQUENT LEGISLATION. If the General Corporation Law of Delaware is
amended after adoption of this Article to expand further the indemnification
permitted to Indemnitees, then the Corporation shall indemnify such persons to
the fullest extent permitted by the General Corporation Law of Delaware, as so
amended.
20
<PAGE> 21
EIGHTH. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.
IN WITNESS WHEREOF, the undersigned President of Quantum Bridge
Communications, Inc., has hereunto set his hand on this 10th day of April, 2000
and affirms under penalties of perjury the statements contained herein as true.
/s/ Anthony Zona
----------------------------------
Anthony Zona
21
<PAGE> 22
CERTIFICATE OF AMENDMENT
OF THE SECOND
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
QUANTUM BRIDGE COMMUNICATIONS, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
------------------------
Quantum Bridge Communications, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by written action in lieu of a
meeting, duly adopted a resolution, pursuant to Sections 141 and 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Second Amended and Restated Certificate of Incorporation of the Corporation
and declaring said amendment to be advisable. The stockholders of the
Corporation duly approved said proposed amendment by written consent in lieu of
a meeting in accordance with Sections 228 and 242 of the General Corporation Law
of the State of Delaware. The resolution setting forth the amendment is as
follows:
RESOLVED: That the first paragraph of Article FOURTH of the Second Amended
and Restated Certificate of Incorporation of the Corporation be
and hereby is deleted in its entirety and that the following
paragraph be inserted in lieu thereof:
FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 84,000,000
shares, consisting of (i) 66,000,000 shares of Common Stock,
$.001 par value per share ("Common Stock"), and (ii)18,000,000
shares of Preferred Stock, $.001 par value per share ("Preferred
Stock"). Of the 18,000,000 shares of authorized Preferred Stock,
6,250,000 shares shall be designated and known as "Series A
Convertible Preferred Stock", 3,056,000 shares shall be
designated and known as "Series B Convertible Preferred Stock"
and 7,579,449 shares shall be designated and know as "Series C
Convertible Preferred Stock."
-1-
<PAGE> 23
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on September 5, 2000.
Quantum Bridge Communications, Inc.
By: /s/ Anthony Zona
--------------------------------
Anthony Zona
President
-2-
<PAGE> 24
CERTIFICATE OF AMENDMENT
OF THE SECOND
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
QUANTUM BRIDGE COMMUNICATIONS, INC.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
------------------------
Quantum Bridge Communications, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Law of the
State of Delaware, does hereby certify as follows:
The Board of Directors of the Corporation, by written action in lieu of a
meeting, duly adopted a resolution, pursuant to Sections 141 and 242 of the
General Corporation Law of the State of Delaware, setting forth an amendment to
the Second Amended and Restated Certificate of Incorporation of the Corporation
and declaring said amendment to be advisable. The stockholders of the
Corporation duly approved said proposed amendment by written consent in lieu of
a meeting in accordance with Sections 228 and 242 of the General Corporation Law
of the State of Delaware. The resolution setting forth the amendment is as
follows:
RESOLVED: That the first paragraph of Article FOURTH of the Second Amended
and Restated Certificate of Incorporation of the Corporation be
and hereby is deleted in its entirety and that the following
paragraph be inserted in lieu thereof:
FOURTH. The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 85,500,000
shares, consisting of (i) 67,500,000 shares of Common Stock,
$.001 par value per share ("Common Stock"), and (ii)18,000,000
shares of Preferred Stock, $.001 par value per share ("Preferred
Stock"). Of the 18,000,000 shares of authorized Preferred Stock,
6,250,000 shares shall be designated and known as "Series A
Convertible Preferred Stock", 3,056,000 shares shall be
designated and known as "Series B Convertible Preferred Stock"
and 7,579,449 shares shall be designated and know as "Series C
Convertible Preferred Stock."
-1-
<PAGE> 25
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President on September 20, 2000.
Quantum Bridge Communications, Inc.
By: /s/ Anthony Zona
------------------------------
Anthony Zona
President
-2-
