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Exhibit 3.1
State of Delaware
PAGE 1
Office of the Secretary of State
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I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "HAHT COMMERCE, INC.", FILED IN THIS OFFICE ON THE TWENTY-NINTH
DAY OF JUNE, A.D. 2000, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/s/ Edward J. Freel
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Edward J. Freel, Secretary of State
3237838 8100 [SEAL] AUTHENTICATION: 0533072
001333728 DATE: 06-29-00
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STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/29/2000
001333728 - 3237838
CERTIFICATE OF INCORPORATION
OF
HAHT COMMERCE, INC.
I. NAME. The name of the corporation (the "Corporation") is HAHT
----
Commerce, Inc.
II. INCORPORATOR. The name and address of the incorporator are as follows:
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Donald R. Reynolds, Esq., 4101 Lake Boone Trail, Suite 300, Raleigh, North
Carolina 27607.
III. REGISTERED OFFICE. The street and mailing address and county of the
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registered office of the Corporation is 15 East North Street, in the City of
Dover, County of Kent, zip code 19901.
IV. REGISTERED AGENT. The name of the registered agent is Incorporating
----------------
Services, Ltd.
V. AUTHORIZATION OF STOCK. The classes of shares and aggregate number of
----------------------
shares of capital stock, all of which have a par value of $0.001 per share, that
the Corporation shall be authorized to issue are as follows:
Class Number
----- ------
Common 84,000,000
Preferred 62,955,940
The Preferred Stock may be issued from time to time in one or more series.
The Board of Directors of the Corporation is authorized from time to time to
designate by resolution one or more series of Preferred Stock, each with the
powers, preferences and rights, and relative participation, optional or other
special rights, and qualifications, limitations or restrictions thereof as shall
be permitted by Delaware law and this Certificate of Incorporation (the
"Certificate"), and subject to any requirements of this Certificate, to fix or
alter the number of shares comprising any such series and the designation
thereof.
VI. DESIGNATION OF SERIES. There is hereby designated a Series A
---------------------
Convertible Preferred Stock (the "Series A Preferred Stock"), consisting of one
million (1,000,000) shares, a Series B Convertible Preferred Stock (the "Series
B Preferred Stock"), consisting of three million two hundred fifty-eight
thousand two hundred (3,258,200) shares, a Series C Convertible Preferred Stock
(the "Series C Preferred Stock"), consisting of three million thirty-nine
thousand one hundred fifty-six (3,039,156) shares, a Series C-1 Convertible
Preferred Stock (the "Series C-1 Preferred Stock"), consisting of five million
(5,000,000) shares, a Series D Convertible Stock (the "Series D Preferred
Stock"), consisting of eighteen million (18,000,000) shares and a Series E
Convertible Preferred Stock (the "Series E Preferred Stock"), consisting of
consisting of twenty-seven million six hundred fifty-eight thousand five hundred
eighty-four (27,658,584) shares. Together, the Series A Preferred Stock,
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the Series B Preferred Stock, the Series C Preferred Stock, the Series C-1
Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock
are hereinafter referred to as the "Preferred Stock," and shall have the
following preferences, voting powers, qualifications, restrictions, special or
relative rights and privileges in respect of the authorized capital stock of the
Corporation:
1. Voting.
------
1A. General. Except as may be otherwise provided in these Articles or
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by law, the 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 shareholders of the Corporation. Each holder of record of shares of
Preferred Stock shall be entitled to such number of votes on each such action as
shall equal the number of shares of Common Stock into which the shares of
Preferred Stock then held by such holder are then convertible. Fractional votes
by the holders of Preferred Stock shall not, however, be permitted, and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number.
1B. Board Size. The Corporation shall not, without the written
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consent or affirmative vote of the holders of at least a majority of the then
outstanding shares of Series B Preferred Stock, Series C Preferred Stock, Series
C-1 Preferred Stock, Series D Preferred Stock and Series E Preferred Stock,
voting together as a separate class, given in writing or by vote at a meeting,
increase the maximum number of directors constituting the Board of Directors to
a number in excess of nine.
1C. Board Seats.
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(a) So long as at least 250,000 shares of Series A Preferred
Stock are outstanding, the holders of the Series A Preferred Stock, voting as a
separate series, shall be entitled to elect one (1) member (the "Series A
Director") of the Corporation's Board of Directors. The Series A Director shall
be such person, if any, who has received a plurality vote of the holders of the
Series A Preferred Stock, voting as a separate series. At any meeting (or in a
unanimous written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy (or the unanimous written consent)
of the holders of a majority of the shares of the Series A Preferred Stock then
outstanding shall constitute a quorum of the Series A Preferred Stock for the
election of directors to be elected solely by the holders of the Series A
Preferred Stock. A vacancy in any directorship elected by the holders of the
Series A Preferred Stock pursuant to this subparagraph III.1C(a) shall be filled
only by vote or written consent of the holders of the Series A Preferred Stock.
(b) So long as at least 814,550 shares of Series B Preferred
Stock are outstanding, the holders of the Series B Preferred Stock, voting as a
separate series, shall be entitled to elect (1) member (the "Series B Director")
of the Corporation's Board of Directors. The Series B Director shall be such
person, if any, who has received a plurality vote of the holders of the Series B
Preferred Stock, voting as a separate series. At any meeting (or in a unanimous
written consent in lieu thereof) held for the purpose of electing directors, the
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presence in person or by proxy (or the unanimous written consent) of the holders
of a majority of the shares of the Series B Preferred Stock then outstanding
shall constitute a quorum of the Series B Preferred Stock for the election of
directors to be elected solely by the holders of the Series B Preferred Stock. A
vacancy in any directorship elected by the holders of the Series B Preferred
Stock pursuant to this subparagraph III.1C(b) shall be filled only by vote or
written consent of the holders of the Series B Preferred Stock.
(c) So long as at least 759,789 shares of Series C Preferred
Stock are outstanding, the holders of the Series C Preferred Stock, voting as a
separate series, shall be entitled to elect (1) member (the "Series C Director")
of the Corporation's Board of Directors. The Series C Director shall be such
person, if any, who has received a plurality vote of the holders of the Series C
Preferred Stock, voting as a separate series. At any meeting (or in a unanimous
written consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the unanimous written consent) of the holders
of a majority of the shares of the Series C Preferred Stock then outstanding
shall constitute a quorum of the Series C Preferred Stock for the election of
directors to be elected solely by the holders of the Series C Preferred Stock. A
vacancy in any directorship elected by the holders of the Series C Preferred
Stock pursuant to this subparagraph III.1C(c) shall be filled only by vote or
written consent of the holders of the Series C Preferred Stock.
(d) So long as at least 2,500,000 shares of Series D Preferred
Stock are outstanding, the holders of the Series D Preferred Stock, voting
separately as a series, shall be entitled to elect (1) member (the "Series D
Director") of the Corporation's Board of Directors. The Series D Director shall
be such person, if any, who has received a plurality vote of the holders of the
Series D Preferred Stock, voting as a separate series. At any meeting (or in a
unanimous written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy (or the unanimous written consent)
of the holders of a majority of the shares of the Series D Preferred Stock then
outstanding shall constitute a quorum of the Series D Preferred Stock for the
election of directors to be elected solely by the holders of the Series D
Preferred Stock. A vacancy in any directorship elected by the holders of the
Series D Preferred Stock pursuant to this subparagraph III.1C(d) shall be filled
only by vote or written consent of the holders of the Series D Preferred Stock.
(e) So long as at least 2,691,066 shares of Series E Preferred
Stock are outstanding, the holders of the Series E Preferred Stock, voting
together as a separate series, shall be entitled to elect one (1) member (the
"Series E Director") of the Corporation's Board of Directors. The Series E
Director shall be such person, if any, who has received a plurality vote of the
holders of the Series E Preferred Stock, voting as a separate series. At any
meeting (or in a unanimous written consent in lieu thereof) held for the purpose
of electing directors, the presence in person or by proxy (or the unanimous
written consent) of the holders of a majority of the shares of the Series E
Preferred Stock then outstanding shall constitute a quorum of the Series E
Preferred Stock for the election of directors to be elected solely by the
holders of the Series E Preferred Stock. A vacancy in any directorship elected
by the holders of the Series E Preferred Stock pursuant to this subparagraph
III.1C(e) shall be filled only by vote or written consent of the holders of the
Series E Preferred Stock.
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(f) So long as shares of Common Stock are outstanding, the
holders of the Common Stock, voting as a separate class, shall be entitled to
elect one (1) member (the "Common Director") of the Corporation's Board of
Directors. The Common Director shall be such person, if any, who has received a
plurality vote of the holders of the Common Stock, voting as a separate class.
At any meeting (or in a unanimous written consent in lieu thereof) held for the
purpose of electing directors, the presence in person or by proxy (or the
unanimous written consent) of the holders of a majority of the shares of the
Common Stock then outstanding shall constitute a quorum of the Common Stock for
the election of directors to be elected solely by the holders of the Common
Stock. A vacancy in any directorship elected by the holders of the Common Stock
pursuant to this subparagraph III.1C(f) shall be filled only by vote or written
consent of the holders of the Common Stock.
(g) The holders of the Preferred Stock and the Common Stock,
voting together as a single class, shall be entitled to elect all other
directors of the Corporation.
(h) Notwithstanding anything to the contrary in these Articles,
if the Corporation fails or refuses, for any reason or for no reason, to redeem
on a Redemption Date (as defined in Paragraph III.6) the required number of the
then outstanding shares of the Series B Preferred Stock, Series C Preferred
Stock, Series C-1 Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock in accordance with the terms and provisions of Paragraph III.6,
the holders of the Series B Preferred Stock, Series C Preferred Stock, Series C-
1 Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, voting
together as a separate class, shall be entitled to elect a majority of the
directors of the Corporation.
2. Dividends. The holders of the Preferred Stock shall be entitled
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to receive, out of funds legally available therefor, dividends at the same rate
as dividends (other than dividends paid in additional shares of Common Stock)
are paid with respect to the Common Stock (treating each share of Preferred
Stock as being equal to the number of shares of Common Stock (including
fractions of a share) into which each share of Preferred Stock is then
convertible).
3. Liquidation.
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(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, the assets of the Corporation
legally available for distribution to its shareholders, whether from capital,
surplus or earnings, shall be distributed in the following order of priority:
(i) The holders of Series E Preferred Stock shall be
entitled to receive, prior and in preference to any distribution to the holders
of any other capital stock of the Corporation, including the Series A, Series B,
Series C, Series C-1, or Series D Preferred Stock or Common Stock, an amount per
share equal to the Series E Original Issuance Price plus, in addition, an amount
equal to any dividends declared but unpaid on such Series E Preferred Stock. If
the assets of the Corporation available for distribution to the holders of such
Series E Preferred Stock shall be insufficient to permit the payment to the
holders of Series E Preferred Stock of their full preferential amount as set
forth in this subparagraph III.3(a)(i), then
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the assets of the Corporation shall be distributed ratably among the holders of
the Series E Preferred Stock in proportion to the respective amounts that would
be payable to the holders of Series E Preferred Stock in respect of the shares
of Series E Preferred Stock held by them upon such distribution if all amounts
payable on or with respect to such shares of Series E Preferred Stock were paid
in full.
(ii) After distribution to the holders of Series E
Preferred Stock of the full preferential amount set forth in subparagraph
III.3(a)(i) hereof, the holders of Series B, Series C, Series C-1 and Series D
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution to the holders of any Series A Preferred Stock or Common Stock, an
amount per share equal to the respective Original Issuance Prices of such Series
B, Series C, Series C-1 and Series D Preferred Stock plus, in addition, an
amount equal to any dividends declared but unpaid on such Series B, Series C,
Series C-1 and Series D Preferred Stock. If the assets of the Corporation
available for distribution to the holders of such Series B, Series C, Series C-1
and Series D Preferred Stock shall be insufficient to permit the payment to the
holders of such series of Preferred Stock of their full preferential amount as
set forth in this subparagraph III.3(a)(ii), then the remaining assets of the
Corporation shall be distributed ratably among the holders of shares of Series
B, Series C, Series C-1 and Series D Preferred Stock in proportion to the
respective amounts that would be payable to the holders of Series B, Series C,
Series C-1 and Series D Preferred Stock in respect of the shares of Series B,
Series C, Series C-1 and Series D Preferred Stock held by them upon such
distribution if all amounts payable on or with respect to such shares of Series
B, Series C, Series C-1 and Series D Preferred Stock were paid in full.
(iii) After distribution to the holders of Series E
Preferred Stock of the full preferential amount set forth in subparagraph
III.3(a)(i) hereof and after distribution to the holders of Series B, Series C,
Series C-1 and Series D of the full preferential amounts set forth in
subparagraph III.3(a)(ii) hereof, the holders of the Series A, Series B, Series
C, Series C-1, Series D and Series E Preferred Stock and the holders of Common
Stock shall be entitled to receive, on a pro rata basis (assuming for this
purpose that each holder of shares of Series A, Series B, Series C, Series C-1,
Series D and Series E Preferred Stock is a holder of the number of shares of
Common Stock into which such shares of Series A, Series B, Series C, Series C-1,
Series D and Series E Preferred Stock are then convertible), that portion of the
remaining assets of the Corporation legally available for distribution, if any.
(iv) Notwithstanding the foregoing, in the event the
Corporation effects, prior to the consummation of a transaction contemplated by
subparagraph III.5P(a), either (a) any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation or (b) any Company Sale Event (as
defined in subparagraph III.3(c) below), whether or not deemed a liquidation,
dissolution or winding up, the holders of Series E Preferred Stock shall be
entitled to receive in respect of each share of Series E Preferred Stock held by
such holder, prior to and in preference to any distribution under subparagraph
III.3(a) to any other holders of capital stock, an amount equal to the greater
of (i) twice the Series E Original Issue Price or (ii) the amount to be received
by the holders of Series E Preferred Stock under subparagraphs III.3(a)(i) and
III.3(a)(iii). In such event, holders of Series E Preferred
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Stock shall not be entitled to any remaining assets, if any, distributed
pursuant to subparagraph III.3(a)(i) or III.3(a)(iii).
(v) The "Series A Original Issuance Price," the "Series B
Original Issuance Price," the "Series C Original Issuance Price," the "Series C-
1 Original Issuance Price," the "Series D Original Issuance Price" and the
"Series E Original Issues Price" shall be $.20, $.5218, $1.66, $0.527, $0.80 and
$0.929, respectively (subject to adjustment for stock splits, combinations and
the like).
(b) Written notice of such liquidation, dissolution or winding
up, stating a payment date, the amount of the liquidation payments and the place
where said liquidation payments shall be payable, shall be delivered in person
or by courier, mailed by certified or registered mail, return receipt requested
or sent by facsimile, telecopier or telex, not less than twenty (20) days prior
to the payment date stated therein, to the holders of record of the Preferred
Stock, such notice to be addressed to each such holder at its address as shown
by the records of the Corporation.
(c) The direct or indirect 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 solely to reincorporate the
Corporation in a different jurisdiction), the reorganization or reclassification
of the capital stock of the Corporation, and the sale, transfer or other
disposition by the Corporation of all or substantially all its assets or capital
stock (each such event, a "Company Sale Event"), shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
the provisions of this Paragraph III.3, unless the Corporation's shareholders of
record, as constituted immediately prior to such consolidation, merger,
reorganization or reclassification hold at least 50% of the voting power of the
surviving or acquiring corporation or entity.
(d) In the event of any merger, consolidation, reorganization,
reclassification or sale of assets contemplated under subparagraph III.3(c)
above, if the consideration received by the Corporation is other than cash, its
value will be deemed its fair market value. The value of any securities received
by the Corporation pursuant to any such merger, consolidation or sale of assets
shall be determined as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability:
(A) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or the Nasdaq National Market,
as the case may be, over the thirty-day period ending three (3) days prior to
the closing;
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the thirty-day period ending three (3) days prior to the
closing; and
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(C) 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 at least a majority of the voting power of all
then outstanding shares of Preferred Stock. If the Corporation and such holders
are not able to mutually agree on the value, the value shall be determined by an
accounting firm of national reputation, and the determination of such accounting
firm shall be final and binding on the Corporation and the holders of Preferred
Stock.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as provided above in subparagraph III.3(d)(i)(A), (B) or (C) to
reflect the approximately fair market value thereof, as mutually determined by
the Corporation and the holders of at least a majority of the voting power of
all then outstanding shares of such Preferred Stock. If the Corporation and such
holders are not able to mutually agree on the value, the value shall be
determined by an accounting firm of national reputation, and the determination
of such accounting firm shall be final and binding on the Corporation and the
holders of Preferred Stock.
4. Restrictions.
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(a) At any time when shares of Series B, Series C, Series C-1,
Series D or Series E Preferred Stock are outstanding, 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 these Articles, and in addition to any other vote
required by law or these Articles, without the approval of the holders of at
least two-thirds of the then outstanding shares of Series B, Series C, Series C-
1, Series D and Series E Preferred Stock, given in writing or by vote at a
meeting, with the Series B, Series C, Series C-1, Series D and Series E
Preferred Stock consenting or voting (as the case may be) together as a single
class, the Corporation will not:
(i) 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 the
Series B, Series C, Series C-1, Series D or Series E Preferred Stock, except for
(i) dividends or other distributions payable on the Common Stock solely in the
form of additional shares of Common Stock, and (ii) the purchase of shares of
Common Stock from 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 and in accordance with the terms of
the documents providing for such rights: provided, however, that the purchase
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price of such shares does not exceed the original issue price;
(ii) Create or authorize the creation of any additional
class or series of shares of stock unless the same ranks junior to the Series B,
Series C, Series C-1, Series D and Series E Preferred Stock as to redemption
rights and as to the distribution of assets on the liquidation, dissolution or
winding up of the Corporation, or increase the authorized amount of the Series
B, Series C, Series C-1, Series D or Series E Preferred Stock or increase
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the authorized amount of any additional class or series of shares of stock
unless the same ranks junior to the Series B, Series C, Series C-1, Series D or
Series E Preferred Stock as to redemption rights and 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 Series
B, Series C, Series C-1, Series D and Series E Preferred Stock or into shares of
any other class or series of stock unless the same ranks junior to the Series B,
Series C, Series C-1, Series D and Series E 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 these Articles or by merger, consolidation or otherwise;
or
(iii) Redeem or otherwise acquire any shares of Series B,
Series C, Series C-1, Series D or Series E Preferred Stock except as expressly
authorized in Paragraph III.6 or pursuant to a purchase offer made pro rata to
all holders of the shares of Series B, Series C, Series C-1, Series D and Series
E Preferred Stock then held by each such holder; or
(iv) Consent to any liquidation, dissolution,
recapitalization, reorganization or winding up of the Corporation or consolidate
or merge (other than a merger solely to reincorporate the corporation in a
different jurisdiction) into or with any other entity, or entities or abandon,
transfer or otherwise dispose of all or substantially all of the Corporation's
assets, or effect any other transaction or series of related transactions in
which more than fifty percent (50%) of the voting power of the Corporation is
disposed of, provided, however, that this Section III.4(a)(iv) shall not apply
to a merger effected exclusively for the purpose of changing the domicile of the
Corporation.
(b) At any time when shares of Series B Preferred Stock are
outstanding, 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 these
Articles, and in addition to any other vote required by law or these Articles,
without the approval of the holders of at least a majority of the then
outstanding shares of Series B Preferred Stock Preferred Stock given in writing
or by vote at a meeting, with the Series B Preferred Stock Preferred Stock
consenting or voting (as the case may be) as a separate class, the Corporation
will not:
(i) Amend, alter or repeal these Articles or the
Corporation's by-laws if the effect would be detrimental or adverse to the
holders of the Series B Preferred Stock Preferred Stock; or
(ii) Amend, alter or repeal the designations or the powers,
preferences or rights, privileges or restrictions of the Series B Preferred
Stock.
(c) At any time when shares of Series C Preferred Stock are
outstanding, 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 these
Articles, and in addition to any other vote required by law or these Articles,
without the approval of the holders of at least a majority of the then
outstanding shares of Series C Preferred Stock given in writing or by vote at a
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meeting, with the Series C Preferred Stock consenting or voting (as the case may
be) as a separate class, the Corporation will not:
(i) Amend, alter or repeal these Articles or the
Corporation's by-laws if the effect would be detrimental or adverse to the
holders of the Series C Preferred Stock; or
(ii) Amend, alter or repeal the designations or the powers,
preferences or rights, privileges or restrictions of the Series C Preferred
Stock.
(d) At any time when shares of Series C-1 Preferred Stock are
outstanding, 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 these
Articles, and in addition to any other vote required by law or these Articles,
without the approval of the holders of at least a majority of the then
outstanding shares of Series C-1 Preferred Stock given in writing or by vote at
a meeting, with the Series C-1 Preferred Stock consenting or voting (as the case
may be) as a separate class, the Corporation will not:
(i) Amend, alter or repeal these Articles or the
Corporation's by-laws if the effect would be detrimental or adverse to the
holders of the Series C-1 Preferred Stock; or
(ii) Amend, alter or repeal the designations or the
powers, preferences or rights, privileges or restrictions of the Series C-1
Preferred Stock.
(e) At any time when shares of Series D Preferred Stock are
outstanding, 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 these
Articles, and in addition to any other vote required by law or these Articles,
without the approval of the holders of at least a majority of the then
outstanding shares of Series D Preferred Stock, given in writing or by vote at a
meeting, with the Series D Preferred Stock consenting or voting (as the case may
be) together as a separate class, the Corporation will not:
(i) Amend, alter or repeal these Articles or the
Corporation's by-laws if the effect would be detrimental or adverse to the
holders of the Series D Preferred Stock; or
(ii) Amend, alter or repeal the designations or the powers,
preferences or rights, privileges or restrictions of the Series D Preferred
Stock.
(f) At any time when shares of Series E Preferred Stock are
outstanding, 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 these
Articles, and in addition to any other vote required by law or these Articles,
without the approval of the holders of at least two-thirds of the then
outstanding shares of Series E Preferred Stock, given in writing or by vote at a
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meeting, with the Series E Preferred Stock consenting or voting (as the case may
be) together as a separate class, the Corporation will not:
(i) Amend, alter or repeal these Articles or the
Corporation's by-laws if the effect would be detrimental or adverse to the
holders of the Series E Preferred Stock;
(ii) Amend, alter or repeal the designations or the powers,
preferences or rights, privileges or restrictions of the Series E Preferred
Stock;
(iii) Create or authorize the creation of any additional
class or series of shares of stock, unless the same ranks junior to the Series E
Preferred Stock as to redemption rights and as to the distribution of assets
upon the liquidation, dissolution or winding up of the Corporation; or
(iv) Increase the number of authorized shares of Series E
Preferred Stock.
5. Conversions. The holders of shares of Preferred Stock shall have
-----------
the following conversion rights:
5A. Right to Convert.
----------------
(a) Subject to the terms and conditions of this Paragraph III.5,
the holder of any share of any series of Preferred Stock shall have the right,
at its option at any time on or prior to the fifth day prior to the Redemption
Date, if any, as may have been fixed in any Redemption Notice with respect to
the Preferred Stock, to convert any shares of such Preferred Stock (except that
upon any liquidation of the Corporation the right of conversion shall terminate
at the close of business on the business day fixed for payment of amounts
distributable on the Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of the Preferred Stock to be so converted by the Original
Issuance Price for such shares of Preferred Stock and (ii) dividing the result
by the applicable Conversion Price for such series of Preferred Stock. Subject
to adjustment as provided in Paragraph III.5, the "Series A Conversion Price,"
the "Series B Conversion Price," the "Series C Conversion Price," the "Series C-
1 Conversion Price," the "Series D Conversion Price" and the "Series E
Conversion Price" shall be $.20, $.5218, $1.66, $0.527, $0.80 and $0.929 per
share, respectively (together the Series A Conversion Price, the Series B
Conversion Price, the Series C Conversion Price, the Series C-1 Conversion
Price, the Series D Conversion Price and the Series E Conversion Price shall be
referred to as the "Conversion Prices").
(b) In case an adjustment of any such Conversion Price has taken
place pursuant to other provisions of this Paragraph III.5, then in each case
such Conversion Price shall be the applicable Conversion Price as last adjusted
and in effect at the date any share or shares of Preferred Stock are surrendered
for conversion. Such rights of conversion shall be exercised by the holder
thereof by giving written notice that the holder elects to convert a stated
10
<PAGE>
number of shares of Preferred Stock into Common Stock and by surrender of a
certificate or certificates for the shares to be so converted by 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
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
will be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly
--------------------------------------------------
after the receipt of the written notice referred to in subparagraph III.5A and
surrender of the certificate or certificates for the share or shares of
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 Preferred Stock. To the extent permitted by law, such conversion shall
be deemed to have been effected and the applicable Conversion Price 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 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.
5C. Fractional Shares; Dividends; Partial Conversion. No fractional
------------------------------------------------
shares shall be issued upon conversion of the 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, declared and unpaid on the shares of Preferred Stock surrendered for
conversion to the date upon which such conversion is deemed to take place as
provided in subparagraph III.5B. In case the number of shares of Preferred Stock
represented by the certificate or certificates surrendered pursuant to
subparagraph III.5A 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 number of shares
of Preferred Stock represented by the certificate or certificates surrendered
which are not to be converted. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this subparagraph III.5C, be
delivered upon such conversion, the Corporation, in lieu of delivering such
fractional share, shall pay to the holder surrendering the 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.
5D. Adjustment of Price Upon Issuance of Common Stock. Except as
-------------------------------------------------
provided in subparagraph III.5E, if and whenever the Corporation shall issue or
sell, or is, in accordance with subparagraphs III.5D(l) through 5D(6), deemed to
have issued or sold, after the filing date of these Articles (the "Filing Date")
any shares of Common Stock including, without limitation, shares of Common Stock
issued or issuable upon the exercise of rights or options as described in
subparagraph III.5D(l) below or the conversion of Convertible Securities as
described in subparagraph III.5D(2) below for a consideration per share which is
less than the
11
<PAGE>
Conversion Price in effect for the Series B Preferred Stock, the Series D
Preferred Stock or the Series E Preferred Stock immediately prior to the time of
such issue or sale, then:
(a) if such issuance, sale or deemed sale or issuance is
dilutive to the Series B Preferred Stock, then upon such issuance, sale or
deemed sale or issuance, the Series B Conversion Price shall be reduced to the
price determined by multiplying the then existing Series B Conversion Price by
the fraction obtained by dividing (i) an amount equal to the sum of (x) the
number of shares of Common Stock outstanding (the "Outstanding Common")
immediately prior to such issue or sale multiplied by the then existing Series B
Conversion Price, and (y) the number of shares of Common Stock which the
consideration, if any, received by the Corporation upon such issue or sale would
purchase at the Series B Conversion Price in effect immediately prior to such
issue or sale, by (ii) the total number of shares of Outstanding Common
immediately after such issue or sale;
(b) if such issuance, sale or deemed sale or issuance is
dilutive to the Series D Preferred Stock, then upon such issuance, sale or
deemed sale or issuance, the Series D Conversion Price shall be reduced to the
price determined by multiplying the then existing Series D Conversion Price by
the fraction obtained by dividing (i) an amount equal to the sum of (x) the
number of shares of Outstanding Common immediately prior to such issue or sale
multiplied by the then existing Series D Conversion Price, and (y) the number of
shares of Common Stock which the consideration, if any, received by the
Corporation upon such issue or sale would purchase at the Series D Conversion
Price in effect immediately prior to such issue or sale, by (ii) the total
number of shares of Outstanding Common immediately after such issue or sale; and
(c) if such issuance, sale or deemed sale or issuance is
dilutive to the Series E Preferred Stock, then upon such issuance, sale or
deemed sale or issuance, the Series E Conversion Price shall be reduced to the
price determined by multiplying the then existing Series E Conversion Price by
the fraction obtained by dividing (i) an amount equal to the sum of (x) the
number of shares of Outstanding Common immediately prior to such issue or sale
multiplied by the then existing Series E Conversion Price, and (y) the number of
shares of Common Stock which the consideration, if any, received by the
Corporation upon such issue or sale would purchase at the Series E Conversion
Price in effect immediately prior to such issue or sale, by (ii) the total
number of shares of Outstanding Common immediately after such issue or sale.
For the purposes of the foregoing calculations, the term
"Outstanding Common" shall include shares of Common Stock issuable upon
conversion of the shares of Preferred Stock then outstanding and shares of
Common Stock deemed issued pursuant to subparagraphs III.5(D)(1) and (2).
For purposes of this subparagraph III.5D, the following subparagraphs
III.5D(l) to 5D(6) shall also be applicable:
5D(l) 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
12
<PAGE>
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 (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 being 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), 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 granting of such Options
or the issuance of such Convertible Securities and thereafter shall be deemed to
be outstanding for the purposes of calculating an adjustment to the Conversion
Prices of the Series B, Series D or Series E Preferred Stock. Except as
otherwise provided in subparagraph III.5D(3), no adjustment of the Series B,
Series D or Series E Conversion Prices 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.
5D(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
(the price per share for which Common Stock is issuable upon such conversion or
exchange being 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),
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 for the
purposes of calculating an adjustment to the Conversion Prices of the Series B,
Series D or Series E Preferred Stock, provided that (a) except as otherwise
provided in subparagraph III.5D(3), no adjustment of the Series B, Series D or
Series E Conversion Prices 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 B, Series D or Series E Conversion Prices have been or are to be made
pursuant to other provisions of this subparagraph III.5D, no further
13
<PAGE>
adjustment of the Series B, Series D or Series E Conversion Prices shall be
made by reason of such issue or sale.
5D(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 III.5D(l), the additional consideration,
if any, payable upon the conversion or exchange of any Convertible Securities
referred to in subparagraph III.5D(l) or 5D(2), or the rate at which Convertible
Securities referred to in subparagraph III.5D(1) or 5D(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 B, Series D or Series E Conversion Prices in effect at the
time of such event shall forthwith be readjusted to the Series B, Series D or
Series E Conversion Prices 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, but only if as a result of such
adjustment the Series B, Series D or Series E Conversion Price then in effect
hereunder is thereby reduced; and on the termination of any such Option or any
such right to convert or exchange such Convertible Securities, such Series B,
Series D or Series E Conversion Prices then in effect hereunder shall forthwith
be increased to the Series B, Series D or Series E Conversion Prices 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.
5D(4) Stock Dividends. In case the Corporation shall declare a
---------------
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for dividends or distributions upon the Common
Stock), Options or Convertible Securities, 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.
5D(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.
14
<PAGE>
5D(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.
5E. 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 B, Series D or Series E Conversion Prices in the case
of the issuance from and after the Filing Date of (a) Common Stock issued upon
the conversion of the Preferred Stock, (b) up to an aggregate of 15,000,000
additional shares of Common Stock issued or issuable upon exercise of options to
purchase Common Stock, including Common Stock issued or issuable upon exercise
of options granted prior to the Filing Date (appropriately adjusted to reflect
the occurrence of any event described in subparagraph III.5F) issued or issuable
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, plus
such number of shares of Common Stock which are repurchased by the Corporation
from such persons after such date pursuant to contractual rights held by the
Corporation and at repurchase prices not exceeding the respective original
purchase prices paid by such persons to the Corporation therefor, (c) capital
stock, or warrants or options to purchase capital stock issued in connection
with bona fide acquisitions, mergers or similar transactions, the terms of which
are approved by the Board of Directors of this Corporation, (d) capital stock,
or options or warrants to purchase capital stock, issued to financial
institutions or lessors in connection with commercial credit arrangements,
equipment financings or similar transactions, the terms of which are approved by
the Board of Directors of this Corporation, (e) shares of Series E Preferred
Stock issued upon the exercise of (i) Series E Preferred Stock Warrants
authorized for issuance as of the date of the filing of these Articles and (ii)
the Series E Preferred Stock Warrants to be issued to Hambrecht & Quist LLC in
connection with the Corporation's Series E Preferred Stock financing, (f) shares
of Common Stock issued or issuable in a public offering prior to or in
connection with which all outstanding shares of Series A, Series B, Series C,
Series C-1, Series D and Series E Preferred Stock will be converted to Common
Stock, and (g) Common Stock issued pursuant to a transaction described in
subparagraph III.5F below.
5F. 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 Conversion Prices 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 Prices 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 5D(4) by reason thereof.
15
<PAGE>
5G. Other Distributions. In the event the Corporation shall declare a
-------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights not referred to in subparagraph III.5F, then, in each such
case for the purpose of this subparagraph III.5G, the holders of the Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock into which
their shares of Preferred Stock are convertible as of the record or other date
fixed for the determination of the holders of Common Stock entitled to receive
such distribution.
5H. 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 (other than
a consolidation, merger, reorganization or reclassification deemed to be a
liquidation, dissolution or winding up pursuant to subparagraph III.3(c)), 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 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 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 Conversion Prices) 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.
5I. Notice of Adjustment. Upon any adjustment of the Conversion
--------------------
Prices, the Corporation shall give written notice thereof, by delivery in
person, certified or registered mail, return receipt requested, facsimile,
telecopier or telex, addressed to each holder of shares of Preferred Stock
effected by such adjustment at the address of such holder as shown on the books
of the Corporation, which notice shall state the Conversion Prices resulting
from such adjustment, setting forth in reasonable detail the method upon which
such calculation is based.
5J. Other Notices. In case at any time:
-------------
(a) 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;
(b) 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:
(c) 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
16
<PAGE>
another entity or entities, or a sale, transfer or other disposition of all or
substantially all its assets; or
(d) 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, facsimile,
telecopier or telex, addressed to each holder of any shares of Preferred Stock
at the address of such holder as shown on the books of the Corporation, (a) at
least twenty (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 twenty (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.
5K. 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 Preferred Stock as herein provided, such number
of shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of 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 lowest Conversion Prices
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 any of
the Conversion Prices if the total number of shares of Common Stock issued and
issuable after such action upon conversion of the Preferred Stock would exceed
the total number of shares of Common Stock then authorized by these Articles.
5L. No Reissuance of Preferred Stock. Shares of Preferred Stock which
--------------------------------
are converted into shares of Common Stock as provided herein shall not be
reissued.
5M. Issue Tax. The issuance of certificates for shares of Common
---------
Stock upon conversion of 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
17
<PAGE>
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
Preferred Stock which is being converted.
5N. Closing of Books. The Corporation will at no time close its
----------------
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
5O. Definition of Common Stock. As used in this Paragraph III.5, the
--------------------------
term "Common Stock" shall mean and include the Corporation's authorized Common
Stock, no par value, as constituted on the date of filing of these Articles, and
shall also include any capital stock of any class of the Corporation thereafter
authorized which shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided that the shares of Common
Stock receivable upon conversion of shares of Preferred Stock shall include only
shares designated as Common Stock of the Corporation on the date of filing of
this instrument, or in case of any reorganization or reclassification of the
outstanding shares thereof, the stock, securities or assets delivered in
exchange for such Common Stock.
5P. Automatic Conversion.
--------------------
(a) If at any time the Corporation shall effect a firm
commitment underwritten public offering of shares of Common Stock that is
underwritten by a nationally recognized investment banking firm and in which the
aggregate net proceeds to the Corporation shall be at least $30,000,000 and the
initial public offering price of such shares is at least 2.5 times the Series E
Original Issuance Price (appropriately adjusted to reflect the occurrence of any
event described in Paragraph III.5F), then effective immediately prior to the
closing of the sale of such shares by the Corporation pursuant to such public
offering, all outstanding shares of Preferred Stock shall automatically convert
to shares of Common Stock on the basis set forth in this Paragraph III.5.
(b) Holders of shares of 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 III.5C.
Until such time as a holder of shares of 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.
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<PAGE>
6. Redemption. The shares of Series B, Series C, Series C-1, Series D
----------
and Series E Preferred Stock shall be redeemed as follows:
6A. Mandatory Redemption. At any time after August 31, 2004, upon the
--------------------
written request (the "Request") of the holders of at least a majority of the
then outstanding shares of Series B, Series C, Series C-1, Series D and Series E
Preferred Stock calculated on an as converted basis and voting together as a
single class, the Corporation shall redeem on each Redemption Date (as defined
below) a number of shares of each of the Series B, Series C, Series C-1, Series
D and Series E Preferred Stock equal to the lesser of (i) one-third the number
of shares of each of the Series B, Series C, Series C-1, Series D and Series E
Preferred Stock as are outstanding on the Initial Redemption Date and (ii) the
total number of shares of each of the Series B Series C, Series C-1, Series D
and Series E Preferred Stock outstanding on such Redemption Date. The "Initial
Redemption Date" shall be the 60th day after the end of the first full calendar
month after the date of the Request. A "Redemption Date" shall be each of the
Initial Redemption Date and each of the first and second anniversary of the
Initial Redemption Date. Any shares of Preferred Stock not redeemed by the
Company on a Redemption Date shall retain all terms, rights and preferences as
described hereunder until such time as such shares are converted or redeemed and
such shares of Preferred Stock shall remain transferable by the holder thereof.
6B. Redemption Price and Payment. The shares of Series B, Series C,
----------------------------
Series C-1, Series D and Series E Preferred Stock to be redeemed on any
Redemption Date shall be redeemed by paying for each share in cash an amount
equal to the applicable Original Issuance Price per share plus, in the case of
each share, an additional amount representing any declared but unpaid dividends
(such total amount with respect to each series being hereinafter referred to as
the "Redemption Price" for such series). Such payment shall be made in full on
the applicable Redemption Date to the holders entitled thereto.
6C. Redemption Mechanics. At least twenty (20) but not more than
--------------------
thirty (30) days prior to each Redemption Date, written notice (the "Redemption
Notice") shall be given by the Corporation by delivery in person, by courier, by
certified or registered mail, return receipt requested, facsimile, 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 B, Series C, Series C-1, Series D or Series E Preferred Stock notifying
such holder of the redemption and specifying the applicable Redemption Price,
such Redemption Date, the number of shares of Series B, Series C, Series C-1,
Series D or Series E 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
applicable Redemption Price, all rights of holders of shares of Series B, Series
C, Series C-1, Series D and Series E Preferred Stock (except the right to
receive the applicable 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
19
<PAGE>
B, Series C, Series C-1, Series D and Series E Preferred Stock on a Redemption
Date are insufficient to redeem the total number of shares of Series B, Series
C, Series C-1, Series D and Series E 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 B,
Series C, Series C-1, Series D and Series E 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 B, Series C, Series C-1, Series D and Series E 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.
6D. Redeemed or Otherwise Acquired Shares to be Retired. Any shares
---------------------------------------------------
of Series B, Series C, Series C-1, Series D or Series E Preferred Stock redeemed
pursuant to this Paragraph III.6 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 B, Series C, Series C-1, Series D and Series E
Preferred Stock.
7. Amendments. No provision of these Articles may be amended,
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modified or waived without the written consent or affirmative vote of the
holders of a majority of the then outstanding shares of Series B, Series C,
Series C-1, Series D and Series E Preferred Stock, voting together as class,
subject to the provisions of paragraph III.4.
VII. COMMON STOCK
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1. Priority. All preferences, voting powers, relative, participating,
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optional or other special rights and privileges, and qualifications, limitations
or restrictions of the Common Stock are expressly made subject to and
subordinate to those that may be fixed with respect to the Preferred Stock.
2. Voting Rights. Each holder of record of Common Stock shall be
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entitled to one vote for each share of Common Stock standing in his name on the
books of the Corporation. Except as otherwise provided by these Articles or by
law, the holders of Common Stock and the holders of Preferred Stock shall vote
together as a single class on all matters as to which the Common Stock is
entitled to vote.
3. Dividends. Subject to provisions of law, these Articles, and the
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rights of the Preferred Stock, the holders of Common 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.
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<PAGE>
4. Liquidation. Upon any liquidation, dissolution or winding up of
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the Corporation, whether voluntary or involuntary, after the payment or
provision for payment of all debts and liabilities of the Corporation and all
preferential amounts to which the holders of the Preferred Stock are entitled
with respect to the distribution of assets in liquidation, the holders of Common
Stock shall be entitled to share ratably in the remaining assets of the
Corporation available for distribution, subject to the provisions of Paragraph
III.3.
VIII. LIMITATION OF LIABILITY. To the fullest extent permitted by the
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Delaware General Corporation Law as the same exists or as may hereafter be
amended, no director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director.
IX. ABILITY TO AMEND BYLAWS. Except as otherwise provided in this
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Certificate of Incorporation, the Board of Directors may from time to time make,
amend, supplement or repeal the Bylaws; provided, however, that the shareholders
may change or repeal any Bylaw adopted by the Board of Directors by the
affirmative vote of the holders of a majority of the voting power of all of the
then outstanding shares of the capital stock of the Corporation (considered for
this purpose as one class), except as otherwise provided in this Certificate of
Incorporation. No amendment or supplement to the Bylaws adopted by the Board of
Directors shall vary or conflict with any amendment or supplement thus adopted
by the shareholders.
IN WITNESS WHEREOF, I have executed this Certificate of Incorporation this the
22nd day of June, 2000.
/s/ Donald R. Reynolds
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Donald R. Reynolds, Esq., Incorporator
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