<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
-------------------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------------------------
DATE OF REPORT: February 18, 2000
(Date of earliest event reported)
PHOTOGEN TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-23553 36-4010347
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
7327 OAK RIDGE HIGHWAY, SUITE B
KNOXVILLE, TENNESSEE 37931
(Address of principal executive offices) (Zip Code)
(423) 769-4011
(Registrant's telephone number including area code)
<PAGE>
ITEM 5. OTHER EVENTS.
Photogen Technologies, Inc. (the "Company"), developers of
non-invasive and minimally invasive therapeutic and diagnostic technologies
has completed a private placement of Series B Convertible Preferred Stock
providing gross proceeds to the Company of $5.5 million. A copy of the
Certificate of Designation, Preferences and Rights of Series B Convertible
Preferred Stock of the Company is filed as Exhibit 3 hereto.
The Company's Board of Directors also determined that the Company
will not proceed with its option to create a joint venture agreement with
Mary J.C. Hendrix, Ph.D., discussed in a press release dated September 29,
1999. Instead, the Company plans to focus on advancing its core competencies
and products in the area of photodynamic therapy and related phototherapies.
Statements in this Form 8-K that are not strictly historical are
"forward-looking" statements that are made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks, which may cause
the Company's actual results in the future to differ materially from expected
results. These risks are qualified in their entirety by cautionary language
and risk factors set forth in the Company's Report on Form 10-QSB for the
quarter ended September 30, 1999 filed with the Securities and Exchange
Commission.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibit is filed with this report:
3 Certificate of Designation, Preferences and Rights of
Series B Convertible Preferred Stock
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Photogen Technologies, Inc.
By: /s/ Tim Scott
----------------------
Tim Scott, President
Date: February 18, 2000
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description
No.
- ------- -----------
<S> <C>
3 Certificate of Designation, Preferences and Rights of
Series B Convertible Preferred Stock
</TABLE>
<PAGE>
Exhibit 3
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
PHOTOGEN TECHNOLOGIES, INC.
We, John T. Smolik and Eric A. Wachter, the President and the
Secretary, respectively, of Photogen Technologies, Inc., a corporation organized
and existing under the Nevada Revised Statutes (the "Corporation"), in
accordance with the provisions of Title 7, Chapter 78 of the Nevada Revised
Statutes thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors of the Corporation (the "Board of Directors") by the Restated Articles
of Incorporation of the said Corporation, the said Board of Directors on January
26, 2000 adopted the following resolutions, pursuant to Article Fourth of the
Corporation's Restated Articles of Incorporation and Title 7, Chapter 78 of the
Nevada Revised Statutes, creating one series of shares of Preferred Stock
designated as Series B Convertible Preferred Stock:
"RESOLVED, that pursuant to Article Fourth of the
Corporation's Restated Articles of Incorporation, a series of the class of
authorized Preferred Stock be, and it hereby is, created and the voting powers,
designation, preferences, limitations, restrictions, relative rights of the
shares of such series are as follows:
1. GENERAL MATTERS.
(a) TITLE OF SERIES. A series of Preferred Stock (as defined
in the Restated Articles of the Corporation) shall be designated as the Series B
Convertible Preferred Stock (the "Series B Preferred Stock").
(b) NUMBER OF SHARES. The number of authorized shares of
Series B Preferred Stock shall be FOUR HUNDRED TWO THOUSAND (402,000) shares,
par value $.01 per share.
(c) FRACTIONAL SHARES. For purposes of dividends and the
Series B Liquidation Preference (as defined below) only, the Corporation will
recognize fractional shares. For all other purposes (including Conversion Rights
(as defined below), voting rights or otherwise) all calculations resulting in a
fractional share with respect to Series B Preferred Stock, or Common Stock (as
defined in the Restated Articles of Incorporation) issuable in connection
therewith, provided for in this Certificate of Designation shall be increased to
the nearest whole share of Series B Preferred Stock or Common Stock, as the case
may be (after aggregating all shares of Series B Preferred Stock or Common Stock
into which such shares are convertible, as
<PAGE>
applicable). Under no circumstances will any fractional share or scrip, or cash
in lieu thereof, be issued or recognized; provided, however, that to the extent
fractional shares are recognized for purposes of dividends and the Series B
Liquidation Preference, such fractional shares will be reflected as a book entry
on the stock transfer records of the Corporation (which records shall be
conclusive and binding absent manifest error).
(d) SENIOR SECURITIES. The Board of Directors is authorized to
fix or alter the rights, preferences, privileges, and restrictions granted to or
imposed upon additional series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or of any of them.
Subject to compliance with applicable protective voting rights which have been
or may be granted to the Preferred Stock or any series thereof in Certificates
of Designation (including Section 10 hereof), the Corporation's Restated
Articles of Incorporation or the Nevada General Corporation Law ("Protective
Provisions"), the rights, privileges, preferences, and restrictions of any such
additional series of Preferred Stock may be subordinated to, PARI PASSU with, or
senior in any respect to any of those of the Series B Preferred Stock or any
future class or series of Preferred Stock. Such senior securities are referred
to as "Senior Securities."
2. DIVIDENDS.
(a) The holders of record on the Series B Dividend Record Date
(as defined below) of the outstanding Series B Preferred Stock shall be entitled
to receive dividends, as and when declared by the Board of Directors out of
funds legally available therefor. Record holders of Series B Preferred Stock on
a Series B Dividend Record Date shall be entitled to one dividend-in-kind
payable each year in additional shares of Series B Preferred Stock at the rate
of six percent (6%) per annum, resulting in the holder of each share of Series B
Preferred receiving a dividend of 0.06 additional shares of Series B Preferred
Stock with respect to each share of Series B Preferred Stock. Each such dividend
shall be payable on or about each January 15 (a "Series B Dividend-in-Kind
Payment Date") (or if such date is not a business day, the dividends due on such
Series B Dividend-in-Kind Payment Date shall be paid on the next succeeding
business day) beginning on January 15, 2001. Such dividends shall be cumulative
and shall accrue on each share of Series B Preferred Stock from the date of such
share's issuance; provided, however, that dividends shall cease to accrue on a
share of Series B Preferred Stock following such share's redemption or
conversion, as the case may be. Dividends on the Series B Preferred Stock shall
be payable to holders of record as they appear on the stock register of the
Corporation on such record date, not less than 15 nor more than 60 days
preceding a dividend payment date (including a Series B Dividend-in-Kind Payment
Date), as shall be fixed by the Board of Directors (a "Series B Dividend Record
Date"). Except in the case of a redemption under Section 4 or mandatory
conversion under Section 6(c), below (in which case dividends shall accrue and
be paid through the date of such event), no dividends shall be payable on the
Series B Preferred Stock for any partial dividend period.
-2-
<PAGE>
(b) Subject to any rights of Senior Securities, no dividends
or other distributions shall be made with respect to the Common Stock unless at
the same time a dividend or distribution is paid with respect to all outstanding
shares of Series B Preferred Stock in an amount equal to the amount paid with
respect to a share of Common Stock as though the holders of the Series B
Preferred Stock were the holders of the number of shares of Common Stock of the
Corporation into which their respective shares of Series B Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.
(c) 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 to purchase any such securities or evidences of indebtedness, then,
subject to any rights of Senior Securities, in each such case the holders of the
Series B Preferred Stock shall be entitled to a proportionate share of any such
distribution as though the holders of the Series B Preferred Stock were the
holders of the number of shares of Common Stock of the Corporation into which
their respective shares of Series B Preferred Stock are convertible as of the
record date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.
3. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, the holders of the Series
B Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Common Stock by reason of their ownership thereof, but after and
subject to the payment in full of all amounts required to be distributed to the
holders of the Corporation's Series A Convertible Exchangeable Preferred Stock
(the "Series A Preferred Stock") and any other Senior Securities ranking on
liquidation prior and in preference to the Series B Preferred Stock, the amount
of $16.88 per share (as adjusted for any stock dividends, combinations or splits
with respect to such shares) ("Series B Liquidation Preference"), respectively.
If upon the occurrence of such event, the assets and funds thus distributed
among the holders of the Series B Preferred Stock shall be insufficient to
permit the payment to such holders of the full aforesaid Series B Liquidation
Preference, then the entire assets and funds of the Corporation legally
available for distribution to the holders of Series B Preferred Stock shall be
distributed ratably among the holders of the Series B Preferred Stock in
proportion to the Series B Liquidation Preference each such holder is otherwise
entitled to receive.
(b) After payment to the holders of the Series A Preferred
Stock, the Series B Preferred Stock and any Senior Securities of the amounts set
forth in Section 3(a) above, the entire remaining assets and funds of the
Corporation legally available for distribution, if any, shall be distributed pro
rata among the holders of the Common Stock and all classes and Series of
Preferred Stock in proportion to the shares of Common Stock then held by them
and the shares
-3-
<PAGE>
of Common Stock which they have the right to acquire upon conversion of the
shares of Preferred Stock then held by them.
(c) For purposes of this Section 3, a liquidation, dissolution
or winding up of the Corporation shall be deemed to be occasioned by, or to
include, (i) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including any reorganization,
merger or consolidation, but excluding any merger effected exclusively to change
the domicile of the Corporation), or (ii) a sale of all or substantially all of
the assets of the Corporation, unless in either case (1) shareholders of record
of the Corporation as constituted immediately prior to such acquisition or sale
will, immediately after such acquisition or sale (by virtue of securities issued
as consideration for the acquisition or sale or otherwise) hold a majority of
the voting power of the surviving or acquiring entity, or (2) the holders of a
majority of the outstanding Series B Preferred Stock agree by vote or consent to
exclude such acquisition or sale from this provision.
(d) Whenever the distribution provided for in this Section 3
shall be payable in securities or property other than cash, the value of such
distribution shall be the fair market value of such securities or other property
as determined in good faith by the Board of Directors.
4. REDEMPTION.
(a) Provided shares of Common Stock issuable on conversion of
Series B Preferred Stock may be resold by the holder thereof either (i) without
registration pursuant to Rule 144(k) under the Securities Act of 1933, as
amended, (the "Securities Act"), or (ii) pursuant to an effective registration
statement, and provided further that an amount equal to the liquidation
preference of all Senior Securities (including the Series A Preferred Stock) is
paid in full, the Corporation may at any time after January 1, 2002 at its
option and in its sole discretion, redeem, from any source of funds legally
available therefor, all or any part of the issued and outstanding Series B
Preferred Stock. To effect such redemption, the Corporation shall pay in cash in
exchange for the shares of Series B Preferred Stock to be redeemed a sum equal
to $23.63 per share of Series B Preferred Stock (as adjusted for any stock
dividends, combinations or splits with respect to such shares) plus all declared
or accumulated but unpaid dividends on such shares (the "Series B Redemption
Price"). Any redemption effected pursuant to this Section 4 shall be made on a
PRO RATA basis among the holders of the Series B Preferred Stock in proportion
to the shares of Series B Preferred Stock then held by them.
(b) The term "Series B Redemption Date" shall refer to the
effective date on which the Corporation redeems shares of Series B Preferred
Stock. At least 30 but no more than 60 days prior to each Series B Redemption
Date, written notice shall be mailed, first class postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is given) of the Series B Preferred Stock to be
redeemed, at the address last shown on the records of the Corporation or its
transfer agent for such holder, notifying such holder of the redemption to be
effected, specifying the number of shares to be
-4-
<PAGE>
redeemed from such holder, the Series B Redemption Date, the Series B Redemption
Price, the place at which payment may be obtained and calling upon such holder
to surrender to the Corporation, in the manner and at the place designated, his
certificate or certificates representing the shares to be redeemed (the
"Redemption Notice"). Except as provided in Section 4(c), on or after the Series
B Redemption Date, each holder of Series B Preferred Stock to be redeemed shall
surrender to this Corporation the certificate or certificates representing such
shares, in the manner and at the place designated in the Redemption Notice, and
thereupon the aggregate Series B Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
canceled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.
(c) From and after the Series B Redemption Date, unless there
shall have been a default in payment of the Series B Redemption Price, all
rights of the holders of shares of Series B Preferred Stock designated for
redemption in the Redemption Notice as holders of Series B Preferred Stock
(except the right to receive the Series B Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or its transfer agent or be deemed to be outstanding for any purpose
whatsoever.
5. VOTING RIGHTS. Each holder of shares of the Series B
Preferred Stock shall be entitled to one vote for each share of Common Stock
into which such Series B Preferred Stock could then be converted (subject to
Section 1(c) above regarding fractional shares). Except as otherwise
expressly provided in this Certificate of Designation, the Restated Articles
of Incorporation or as required by the Nevada General Corporation Law, the
holders of Series B Preferred Stock shall vote together with the Common Stock
as a single class and shall (subject to Section 6(e) below) be entitled to
notice of any stockholders' meeting in the same manner as holders of Common
Stock in accordance with the Bylaws of the Corporation.
6. CONVERSION.
(a) CONVERSION RIGHTS. Each holder of Series B Preferred Stock
shall have the right to convert the Series B Preferred Stock into Common Stock
on and subject to the provisions of Section 6 and Section 7 of this Certificate
of Designation ("Series B Conversion Rights"). In the event of a liquidation of
the Corporation, all Series B Conversion Rights shall terminate at the close of
business on the fifth full business day preceding the date fixed for the payment
of any amounts distributable on liquidation to the holders of Series B Preferred
Stock.
(b) OPTIONAL CONVERSION. Each share of Series B Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share and on or prior to the fifth day prior
to the Series B Redemption Date, if any, as may have been fixed in any
Redemption Notice with respect to the Series B Preferred Stock, at the office of
the Corporation or any transfer agent for such stock, into such number of fully
paid and
-5-
<PAGE>
nonassessable shares of Common Stock as is determined by dividing (i) (x) $16.88
by (y) the Series B Conversion Price if the conversion takes place at any time
on or before December 31, 2000; (ii) (x) $20.26 by (y) the Series B Conversion
Price if the conversion takes place at any time between January 1, 2001 through
December 31, 2001; and (iii) (x) $23.63 by (y) the Conversion Price if the
conversion takes place at any time on or after January 1, 2002. The "Series B
Conversion Price" shall initially be $16.88, and shall be adjusted as provided
in Section 7, below (provided, however, that the Series B Conversion Price shall
not exceed $16.88 per share).
(c) MANDATORY CONVERSION. The Corporation may at its option
require the holders of all outstanding shares of Series B Preferred Stock to
convert their Series B Preferred Stock into the number shares of Common Stock
into which such Series B Preferred Stock would be convertible pursuant to
Section 6(b) (subject, however, to the last sentence of this Section 6(c)) upon
the occurrence of any of the following:
(i) The date specified by the vote or written consent
or agreement of holders of a majority of the shares of Series B Preferred Stock
then outstanding;
(ii) Immediately prior to the closing of the sale of
the Corporation's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act, which results in the Corporation
receiving $20,000,000 or more in gross proceeds (excluding underwriter's
discounts, commissions and similar compensation), other than a registration
relating solely to a transaction under Rule 145 under the Securities Act or to a
stock option or other type of employee benefit plan of the Corporation;
(iii) At the discretion of the Board of Directors, if
(A) holders of the requisite majority of outstanding shares of Series B
Preferred Stock do not approve (by vote or written consent) of the creation,
authorization and/or issuance of any Special Senior Security (defined below)
upon which such holders are entitled to vote as a separate series or class
pursuant to Section 10 below or pursuant to the Nevada General Corporation Law,
but (B) such transaction has been approved and recommended by the Board of
Directors. A "Special Senior Security" means any Senior Security or PARI PASSU
security which is issued to any vendor, licensor or other person or entity
engaged in a joint venture or other commercial or similar transaction or
relationship with the Corporation or any of the Corporation's affiliates, the
bona fide purpose of which transaction is (in the good faith business judgment
of the Board of Directors) to develop the Corporation's business and not solely
to provide financing to or invest in the securities of the Corporation;
(iv) At the discretion of the Board of Directors, at
any time after January 1, 2005.
Notwithstanding anything herein to the contrary, if any mandatory conversion
under Section 6(c) takes place pursuant to subparagraphs (ii) or (iii) hereof at
any time before December 31, 2000,
-6-
<PAGE>
the number of shares of Common Stock issuable in connection with such conversion
shall be calculated by dividing (x) $20.26 by (y) the Series B Conversion Price.
(d) MECHANICS OF CONVERSION.
(i) Before any holder of Series B Preferred Stock
shall be entitled to convert the same on an optional basis pursuant to Section
6(b) into shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for such stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state
therein the name or names in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation or its transfer agent, such certificates surrendered for conversion
shall be endorsed or accompanied by written instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or such
holder's attorney duly authorized in writing. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series B Preferred Stock, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have taken place immediately prior to the close of
business on the date of surrender of the shares of Series B Preferred Stock to
be converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock after such date.
(ii) If the conversion is in connection with an
underwritten offering of securities pursuant to the Securities Act, the
conversion may, at the option of any holder tendering shares of Series B
Preferred Stock for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock upon conversion of the Series
B Preferred Stock shall not be deemed to have converted such Series B Preferred
Stock until immediately prior to the closing of such sale of securities.
(iii) In the event of a mandatory conversion of
Series B Preferred Stock pursuant to Section 6(c) the conversion shall be deemed
to have taken place at the close of business on the effective date specified by
the Board of Directors. On such effective date, all of the outstanding
certificates which prior to that time represented shares of Series B Preferred
Stock shall be deemed for all purposes to evidence ownership of and to represent
the number of shares of Common Stock into which the shares of Series B Preferred
Stock have been converted. The registered owner on the books and records of the
Corporation or its transfer agent of any such outstanding Series B Preferred
Stock certificate shall, until such certificate shall have been surrendered for
exchange or transfer or otherwise accounted for to the Corporation or its
transfer agent, have and be entitled to exercise any voting and other rights
with respect to the shares of Common Stock into which such Series B Preferred
Stock shall have been converted; provided, however, that dividends or other
distributions upon shares of Common Stock resulting from the
-7-
<PAGE>
conversion of such Series B Preferred Stock shall accrue but shall not be
delivered to any such stockholder until such stockholder has surrendered or
otherwise accounted for the Series B Preferred Stock stock certificate
representing the converted shares. The Corporation shall issue new certificates
for Common Stock in due course as certificates for converted Series B Preferred
Stock are tendered to the Corporation or its transfer agent for exchange or
transfer or otherwise accounted for.
(e) NOTICE TO HOLDERS OF SERIES B PREFERRED STOCK. In the
event:
(i) that the Corporation declares a dividend (or any
other distribution) on its Common Stock payable in Common Stock or other
securities of the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of
the Corporation (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution thereon);
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation, or an acquisition or sale of
assets which has the effect of a dissolution under Section 3(c); or
(v) of any transaction that causes a mandatory
conversion pursuant to Section 6(c);
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Series B Preferred Stock, and shall cause to
be mailed to the holders of the Series B Preferred Stock at their last addresses
as shown on the records of the Corporation or such transfer agent, at least ten
days prior to the date specified in Sections 6(e)(v)(1) or 6(e)(v)(2) below or
twenty days before the date specified in Section 6(e)(v)(3) below, a notice
stating:
(1) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(2) the effective date of any mandatory conversion
pursuant to Section 6(c), or
(3) the date on which such reclassification,
dissolution, liquidation, winding up, acquisition or sale of
assets is expected to become effective, and the date as of
which it is expected that holders of Common Stock of
-8-
<PAGE>
record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, sale, dissolution or
winding up.
(f) NO IMPAIRMENT. The Corporation will not, by amendment of
its Restated Articles of Incorporation or through any reorganization, transfer
of assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of Section 6 and Section 7 in the taking of all such action as may be
necessary or appropriate in order to protect the Series B Conversion Rights
against impairment.
(g) ISSUE TAXES. The Corporation shall pay any and all issue
and other taxes that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of shares of Series B Preferred Stock
pursuant hereto; provided, however, that the Corporation shall not be obligated
to pay any transfer taxes resulting from any transfer requested by any holder in
connection with any such conversion.
(h) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of all shares of Series B Preferred Stock issuable pursuant to this
Certificate of Designation, such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of the Series B Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series B Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to the Corporation's Restated
Articles of Incorporation.
7. ADJUSTMENT TO SERIES B CONVERSION RIGHTS FOR CERTAIN DILUTING
EVENTS.
(a) DEFINITIONS.
(i) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 7(b) below, deemed to
be issued) by the Corporation after the Original Issue Date (as defined in
Section 7(a)(iv) below), but EXCLUDING shares of Common Stock issued or
issuable:
(1) as a dividend or distribution on Series B
Preferred Stock;
-9-
<PAGE>
(2) by reason of a dividend, stock split, or
other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the
foregoing clause (1);
(3) upon the exercise of options excluded
from the definition of "Option" in Section 7(a)(iii);
(4) to vendors, licensors, lenders and
similar third parties engaged in commercial relationships with
the Corporation, up to 1,000,000 shares of Common Stock in the
aggregate, or Options to acquire or Convertible Securities
convertible into such Common Stock; or
(5) upon conversion of shares of Series B
Preferred Stock or any other Convertible Securities (as
defined in Section 7(a)(ii) below) outstanding as of the date
hereof (including the Series A Preferred Stock, the
Convertible Promissory Note in the principal amount of
$4,800,000 dated October 20, 1999 originally issued to Elan
International Services Ltd., the Warrant to acquire 100,000
shares of Common Stock originally issued to Elan International
Services, Ltd., and the Placement Agent's Warrant Agreement
originally issued or to be issued to Gilford Securities
Incorporated in connection with the offering of Series B
Preferred Stock).
(ii) "Convertible Securities" shall mean any
evidences of indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(iii) "Option" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities, but EXCLUDING rights, options or warrants excluded from the
definition of "Additional Shares of Common Stock" and rights, options or
warrants granted to employees, directors or consultants of the Corporation
pursuant to plans or agreements adopted or approved by the Board of Directors to
acquire up to that number of shares of Common Stock as is equal to ten (10%)
percent of the Common Stock outstanding at the time of such adoption or approval
(provided that, for purposes of this Section 7(a)(iii), all shares of Common
Stock issuable upon (1) exercise of rights, options or warrants granted or
available for grant under plans approved by the Board of Directors, (2)
conversion of shares of Preferred Stock, or (3) conversion of Preferred Stock
issuable upon conversion or exchange of any Convertible Security, shall be
deemed to be outstanding).
(iv) "Original Issue Date" shall mean the date on
which the first share of Series B Preferred Stock is issued.
-10-
<PAGE>
(b) DEEMED ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If
the Corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities, then the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue; provided, that Additional Shares of Common Stock shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to Section 7(c)) hereof) of such Additional Shares of Common Stock
would be less than the Series B Conversion Price on the date such securities are
issued, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(i) No further adjustment in the Series B Conversion
Price shall be made upon the subsequent issue of shares of Common Stock upon the
exercise of such Option or conversion or exchange of such Convertible Security;
(ii) Upon the expiration or termination of any
unexercised Option, the Series B Conversion Price shall not be readjusted, but
the Additional Shares of Common Stock deemed issued as the result of the
original issue of such Option shall not be deemed issued for the purposes of any
subsequent adjustment of the Series B Conversion Price; and
(iii) In the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion or exchange of any
Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Series B Conversion
Price then in effect shall forthwith be readjusted to such Series B Conversion
Price as would have obtained had the adjustment that was made upon the issuance
of such Option or Convertible Security not exercised or converted prior to such
change been made upon the basis of such change, but no further adjustment shall
be made for the actual issuance of Common Stock upon the exercise or conversion
of any such Option or Convertible Security.
(c) DETERMINATION OF CONSIDERATION. For purposes of this
Section 7, the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(i) CASH AND PROPERTY: Such consideration shall:
(1) insofar as it consists of cash, be
computed at the aggregate of cash received by the Corporation,
excluding amounts paid or payable for accrued interest or
accrued dividends;
-11-
<PAGE>
(2) insofar as it consists of property other
than cash, be computed at the fair market value thereof at the
time of such issue, as determined in good faith by the Board
of Directors; and
(3) in the event Additional Shares of Common
Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received,
computed as provided in clauses (1) and (2) above, as
determined in good faith by the Board of Directors.
(ii) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued relating to Options and Convertible
Securities, shall be determined by dividing:
(1) the total amount, if any, received or
receivable by the Corporation as consideration for the issue
of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth in
the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities, by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a
subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(d) NO ADJUSTMENT OF SERIES B CONVERSION PRICE. No adjustment
in the number of shares of Common Stock into which the Series B Preferred Stock
is convertible shall be made by adjustment in the Series B Conversion Price: (i)
unless the consideration per share (determined pursuant to Section 7(c)) for an
Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the then-current Series B Conversion Price, or (ii) if
prior to such issuance, the Corporation receives written notice from the holders
of a majority of the then outstanding shares of Series B Preferred Stock
agreeing that no such adjustment shall be made as the result of the issuance of
Additional Shares of Common Stock.
(e) ADJUSTMENT OF SERIES B CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. If the Corporation shall at any time after
the Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Section 7(b),
but excluding shares issued as provided in Sections 7(f) through 7(i), without
consideration or for a consideration per share less than the then-current Series
B Conversion Price, then and in such event, the Series B Conversion Price shall
be
-12-
<PAGE>
reduced, concurrently with such issue to a price (calculated to the nearest
cent) determined by multiplying the Series B Conversion Price by a fraction,
(i) the numerator of which shall be (1) the number of
shares of Common Stock outstanding immediately prior to such issue plus (2) the
number of shares of Common Stock which the aggregate consideration received by
the Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Series B Conversion Price; and
(ii) the denominator of which shall be (1) the number
of shares of Common Stock outstanding immediately prior to such issue plus (2)
the number of such Additional Shares of Common Stock so issued.
Notwithstanding the foregoing, the Series B Conversion Price shall not be
reduced if the amount of such reduction would be an amount less than $.05, but
any such amount shall be carried forward and reduction with respect thereto made
at the time of and together with any subsequent reduction which, together with
such amount and any other amount or amounts so carried forward, shall aggregate
$.05 or more.
(f) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the
Corporation shall at any time or from time to time after the Original Issue Date
effect a subdivision of the outstanding Common Stock, the Series B Conversion
Price then in effect immediately before that subdivision shall be
proportionately decreased. If the Corporation shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Common
Stock, the Series B Conversion Price then in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(g) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue, a dividend or other distribution payable in Additional
Shares of Common Stock, then and in each such event the Series B Conversion
Price shall be decreased as of the time of such issuance, by multiplying the
Series B Conversion Price by a fraction:
(i) the numerator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance, and
(ii) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding immediately prior to the
time of such issuance plus the number of shares of Common Stock issuable in
payment of such dividend or distribution.
-13-
<PAGE>
(h) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall make or issue a dividend or other distribution payable in securities
of the Corporation other than shares of Common Stock, then and in each such
event provision shall be made so that the holders of shares of the Series B
Preferred Stock shall receive upon conversion thereof in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of the
Corporation that they would have received had their Series B Preferred Stock
been converted into Common Stock on the date of such event and had thereafter,
during the period from the date of such event to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period given application to all adjustments called for during such period, under
this paragraph with respect to the rights of the holders of the Series B
Preferred Stock.
(i) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR
SUBSTITUTION. If the Common Stock issuable upon the conversion of the Series B
Preferred Stock shall be changed into the same or a different number of shares
of any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for in Section 3(c) above), then and
in each such event the holder of each share of Series B Preferred Stock shall
have the right thereafter to convert such share into the kind and amount of
shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock into which such shares of Series B Preferred Stock might
have been converted immediately prior to such reorganization, reclassification,
or change, all subject to further adjustment as provided herein.
(j) CERTIFICATE AS TO ADJUSTMENTS. Upon each adjustment or
readjustment of the Series B Conversion Price pursuant to this Section 7, the
Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder, if
any, of Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based and shall file a copy of such certificate with its
corporate records. The Corporation shall, upon the written request at any time
of any holder of Series B Preferred Stock, furnish or cause to be furnished to
such holder a similar certificate setting forth (1) such adjustments and
readjustments, (2) the Series B Conversion Price then in effect, and (3) the
number of shares of Common Stock and the amount, if any, of other property which
then would be received upon the conversion of Series B Preferred Stock. Despite
such adjustment or readjustment, the form of each or all Series B Preferred
Stock certificates, if the same shall reflect the initial or any subsequent
Series B Conversion Price, need not be changed in order for the adjustments or
readjustments to be valued in accordance with the provisions of this Certificate
of Designation, which shall control.
-14-
<PAGE>
8. NO REISSUANCE OF SERIES B PREFERRED STOCK. No share or shares of
Series B Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be canceled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
9. NOTICES. Any notice required by the provisions of this Certificate
of Designation to be given to the holders of shares of Series B Preferred Stock
shall be deemed given if deposited in the United States mail, postage prepaid,
and addressed to each holder of record at his address appearing on the books of
the Corporation.
10. PROTECTIVE PROVISIONS. Subject in all cases to the provisions of
Section 6(c)(iii) above and the rights of any series of Preferred Stock that may
from time to time come into existence, so long as any shares of Series B
Preferred Stock are outstanding, the Corporation shall not, without first
obtaining the approval by vote or written consent of the holders of a majority
of the then-outstanding shares of Series B Preferred Stock, voting separately as
a series, (a) amend its Restated Articles of Incorporation so as to adversely
affect the shares of Series B Preferred Stock, (b) authorize or issue any other
equity security or security convertible into or exercisable for any equity
security having a preference over or being PARI PASSU with the Series B
Preferred Stock with respect to liquidation or dividend rights, or (c) change
the rights of the holders of the Series B Preferred Stock as set forth herein in
any other material respect."
-15-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation, Preferences and Rights to be duly executed by its
President and Secretary as of January 26, 2000.
/s/ John T. Smolik
-----------------------------------------
John T. Smolik, President
/s/ Eric A. Wachter
-----------------------------------------
Eric A. Wachter, Secretary
STATE OF Tennessee )
) SS.
COUNTY OF Knox )
On this 27th day of January, 2000, personally appeared before
me, a Notary Public in and for the State and County aforesaid, John T. Smolik,
known to me to be the person described in and did say that he is the President
of Photogen Technologies, Inc., a Nevada corporation, and that the foregoing
Certificate of Designation, Preferences and Rights of Series B Preferred Stock
was signed on behalf of said corporation by authority of its board of directors,
and said John T. Smolik acknowledged to me that said instrument to be the free
act and deed of said corporation.
WITNESS my hand and official seal, the day and year first
above written.
/s/ Theresa Ann Woods
-----------------------------------------
Notary Public
(Notarial Seal)
STATE OF Tennessee )
) SS.
COUNTY OF Knox )
On this 27th day of January, 2000, personally appeared before
me, a Notary Public in and for the State and County aforesaid, Eric A. Wachter,
known to me to be the person described in and did say that he is the Secretary
of Photogen Technologies, Inc., a Nevada corporation, and that the foregoing
Certificate of Designation, Preferences and Rights of Series B Preferred Stock
was signed on behalf of said corporation by authority of its board of directors,
and said Eric A. Wachter acknowledged to me that said instrument to be the free
act and deed of said corporation.
WITNESS my hand and official seal, the day and year first
above written.
/s/ Theresa Ann Woods
-----------------------------------------
Notary Public
(Notarial Seal)
-16-
