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UNITED STATES
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 (Date of earliest event reported): NOVEMBER 18, 1996
LIFECELL CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 0-19890 76-0172936
(State of Incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
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3606 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 281/367-5368
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Exhibit Index Appears on Page 4
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ITEM 5. OTHER EVENTS
PRESS RELEASE
On November 19, 1996, LifeCell Corporation (the "Company") issued a press
release announcing that it had completed a private placement of $12.4 million of
convertible preferred stock and common stock purchase warrants.
Lead investors were Vector Fund Management, L.P. and C.I.B.C. Wood Gundy
Capital. Gruntal & Co. Incorporated served as the Company's placement agent for
the financing. Proceeds from the financing will be used primarily to accelerate
and expand the marketing activities for the Company's AlloDerm(R) preserved
human dermis product. A copy of the press release is filed with this Current
Report on Form 8-K as Exhibit 99.1.
Pursuant to the private placement, on November 18, 1996, the Company sold
124,157 shares of Series B Preferred Stock, par value $.001 per share (the
"Series B Preferred Stock"), that are convertible into an aggregate of 4,005,052
shares of Common Stock, par value $.001 per share (the "Common Stock"), at a per
share conversion price of $3.10, subject to adjustment, and warrants exercisable
for 2,803,530 shares of Common Stock at a per share exercise price of $4.13,
subject to adjustment. The Series B Preferred Stock bears dividends for five
years and ranks pari passu with the Company's outstanding Series A Preferred
Stock, $.001 par value per share, and senior to the Company's Common Stock in
liquidation. Holders of Series B Preferred Stock have voting rights on all
matters on an as converted to Common Stock basis, and have the right to elect
three members to the Company's Board of Directors. The Company has agreed to
file a shelf registration statement to register the resale of the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock and
exercise of the warrants and has granted the purchasers of the Series B
Preferred Stock certain other registration rights.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS.
The following documents are filed as exhibits to this report in accordance
with Item 601 of Regulation S-K.
4.1 Restated Certificate of Incorporation of LifeCell Corporation, as
amended.
99.1 Press release of LifeCell Corporation dated November 18, 1996.
Page 2
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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.
LIFECELL CORPORATION
Dated: November 26, 1996 By: /s/ PAUL M. FRISON
Paul M. Frison
President and Chief Executive Officer
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INDEX TO EXHIBITS
EXHIBIT PAGE
NUMBER EXHIBIT NUMBER
------- ------- ------
4.1 Restated Certificate of Incorporation of LifeCell
Corporation, as amended.
99.1 Press release of LifeCell Corporation dated
November 18, 1996.
Page 4
EXHIBIT 4.1
RESTATED CERTIFICATE OF INCORPORATION
OF
LIFECELL CORPORATION
(Originally incorporated under the name
"Successor LifeCell Corporation" on January 6, 1992)
FIRST: The name of the Corporation is LifeCell Corporation.
SECOND: The registered office of the Corporation in the State of Delaware
is located at Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of capital stock that the Corporation
shall have authority to issue is 14,500,000, of which 2,000,000 shares of the
par value of $.001 per share shall be a class designated Preferred Stock
("Preferred Stock"), and 12,500,000 shares of the par value of $.001 per share
shall be a class designated Common Stock ("Common Stock").
The voting powers, designations, preferences and relative, participating,
optional or other special rights and the qualifications, limitations or
restrictions thereof, of the Preferred Stock and Common Stock, and the authority
with respect thereto expressly granted to the Board of Directors of the
Corporation, are as follows:
A. COMMON STOCK.
1. VOTING RIGHTS. The holders of shares of Common Stock shall have the
following voting rights:
(a) Each share of Common Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the stockholders of the
Corporation.
(b) Except as otherwise required by law or the provisions of this
Restated Certificate of Incorporation, the holders of shares of Common Stock
shall not be entitled to vote separately as a class on any matter submitted to
a vote of the stockholders of the Corporation.
2. LIQUIDATION. Subject to the provisions of this Restated Certificate of
Incorporation, in the event of any liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, after payment or
provision for payment of any preferential amount due the holders of shares of
any other class or series of stock, the holders of shares of Common Stock shall
be entitled to receive ratably, based on the number of shares
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of Common Stock held by such holders, any assets of the Corporation available
for distribution to holders of Common Stock.
3. DIVIDENDS. Subject to the provisions of this Restated Certificate of
Incorporation, the Board of Directors, in its discretion, out of funds legally
available for the payment of dividends and at such times and in such manner as
determined by the Board of Directors, may declare and pay dividends on the
outstanding shares of Common Stock of the Corporation.
4. REACQUIRED SHARES. Any shares of Common Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever that have been retired
shall upon their retirement become authorized but unissued shares of Common
Stock.
B. PREFERRED STOCK.
1. ADDITIONAL SERIES OF PREFERRED STOCK.
The Board of Directors is hereby expressly vested with the authority to
adopt a resolution or resolutions providing for the issue of authorized but
unissued shares of Preferred Stock, which shares may be issued from time to time
in one or more series and in such amounts as may be determined by the Board of
Directors in such resolution or resolutions. The voting powers, designations,
preferences and relative, participating, optional or other special rights, if
any, of each such series of Preferred Stock and the qualifications, limitations
or restrictions, if any, thereof (collectively the "Series Terms"), shall be
such as are stated and expressed in a resolution or resolutions providing for
the creation or revision of such Series Terms adopted by the Board of Directors
or, to the extent permitted by law, a committee of the Board of Directors to
which such responsibility is specifically and lawfully delegated.
2. SERIES A PREFERRED STOCK.
The voting powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of one series of Preferred Stock, the Series A Preferred
Stock, designated on November 9, 1994, are as follows:
(a) DESIGNATION. The designation of the series shall be "Series A
Preferred Stock" (the "Series A Preferred Stock").
(b) NUMBER. The number of shares constituting the Series A Preferred
Stock shall be 300,000.
(c) VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
(i) Except as required by law or Section B.2.(c)(ii) of this
Article Fourth, the holders of shares of Series A Preferred Stock shall not have
any right or power to vote on any question or in any proceeding or to be
represented at or to receive notice of any meeting or consent of stockholders.
On any matters on which the holders of the Series A
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Preferred Stock shall be entitled to vote, each share of Series A Preferred
Stock shall entitle the holder thereof to one vote multiplied by the number of
shares of Common Stock into which such share of Series A Preferred Stock is
convertible on the record date for such vote.
(ii) Without the vote or consent of the holders of at least a
majority of the shares of Series A Preferred Stock then outstanding, the
Corporation may not (A) authorize, create or issue, or increase the authorized
number of shares of, any class or series of capital stock ranking prior to or on
a parity with the Series A Preferred Stock either as to dividends or
liquidation, (B) authorize, create or issue any class or series of common stock
of the Corporation other than the Common Stock, (C) authorize any
reclassification of the Series A Preferred Stock, (D) authorize, create or issue
any securities convertible into capital stock prohibited by Section
B.2.(c)(ii)(A) or (B) of this Article Fourth, or (E) amend Section B.2 of this
Article Fourth.
(d) LIQUIDATION.
(i) PREFERENCE. Subject to the rights of the holders of any
other series of Preferred Stock ranking senior to or on a parity with the Series
A Preferred Stock with respect to liquidation and any other class or series of
capital stock of the Corporation ranking senior to or on a parity with the
Series A Preferred Stock with respect to liquidation, in the event of any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, the holders of record of the issued and
outstanding shares of Series A Preferred Stock shall be entitled to receive, out
of the assets of the Corporation available for distribution to the holders of
shares of Series A Preferred Stock, prior and in preference to any distribution
of any of the assets of the Corporation to the holders of Common Stock or and
any other series of Preferred Stock ranking junior to the Series A Preferred
Stock with respect to liquidation and any other class or series of capital stock
of the Corporation ranking junior to the Series A Preferred Stock with respect
to liquidation, an amount in cash per share equal to $20.00, plus an amount
equal to all dividends accrued and unpaid on each such share (whether or not
declared) up to the date fixed for distribution. If, upon such liquidation,
dissolution or winding up of the affairs of the Corporation, the assets of the
Corporation distributable among the holders of Series A Preferred Stock and any
other series of Preferred Stock ranking on a parity therewith in respect thereto
or any class or series of capital stock of the Corporation ranking on a parity
therewith in respect thereto shall be insufficient to permit the payment in full
to all such holders of shares of the preferential amounts payable to them, then
the entire assets of the Corporation available for distribution to such holders
of shares shall be distributed ratably among such holders in proportion to the
respective amounts that would be payable per share if such assets were
sufficient to permit payment in full. After payment of the full amount to which
they are entitled upon liquidation pursuant to this Section B.2.(d)(i), the
holders of shares of Series A Preferred Stock will not be entitled to any
further participation in any distribution of assets by the Corporation. Neither
a consolidation or merger of the Corporation with another corporation or other
entity nor a sale, transfer, lease or exchange of all or part of the
Corporation's assets will be considered a liquidation, dissolution or winding up
of the affairs of the Corporation for purposes of this Section B.2.(d)(i).
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(ii) ADJUSTMENTS. The liquidation preference provided for
herein with respect to the Series A Preferred Stock shall be equitably adjusted
to reflect any stock dividend, stock distribution, stock split or reverse stock
split, combination of shares, subdivision of shares or reclassification of
shares with respect to the Series A Preferred Stock.
(e) CONVERSION RIGHTS.
(i) OPTIONAL CONVERSION. Subject to and upon compliance with
the provisions of this Section B.2(e)(and Section B.2(g) with respect to
conversion after notice of redemption), the holder of any shares of Series A
Preferred Stock shall have the right at such holder's option, at any time or
from time to time, and without the payment of any additional consideration
therefor, to convert any of such shares of Series A Preferred Stock into fully
paid and nonassessable shares of Common Stock at the Conversion Price (as
defined in Section below) in effect on any Conversion Date (as defined in
Section B.2(e)(iv) below) upon the terms hereinafter set forth.
(ii) AUTOMATIC CONVERSION. Each outstanding share of Series A
Preferred Stock shall automatically be converted, without any further act of the
Corporation or its stockholders, at the Conversion Price then in effect, into
fully paid and nonassessable shares of Common Stock on November 9, 1997.
(iii) NUMBER OF CONVERSION SHARES. Each share of Series A
Preferred Stock shall be convertible pursuant to Sections B.2.(e)(i) and
B.2.(e)(ii) into a number of shares of Common Stock determined by dividing (x)
$20.00 by (y) the Conversion Price in effect on any Conversion Date. For the
purposes of this Section B.2(e), the term "Conversion Price" shall initially
mean $2.99.
(iv) MECHANICS OF CONVERSION. The holder of any shares of
Series A Preferred Stock may exercise the conversion right specified in Section
B.2(e)(i) by surrendering to the Corporation or any transfer agent of the
Corporation the certificate or certificates for the shares to be converted,
accompanied by written notice specifying the number of shares to be converted.
Upon the occurrence of automatic conversion pursuant to Section B.2.(e)(ii), the
outstanding shares of Series A Preferred Stock shall be converted automatically
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent; provided that the Corporation shall not be obligated to issue to
any holder certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Series A Preferred
Stock are delivered either to the Corporation or any transfer agent of the
Corporation. Conversion shall be deemed to have been effected on the date when
delivery of notice of an election to convert and of certificates for shares
being converted is made or on the date specified in Section B.2.(e)(ii), as the
case may be, and such date is referred to herein as the "Conversion Date".
Subject to the provisions of Section B.2.(e)(vi)(C), as promptly as practicable
thereafter (and after surrender of the certificate or certificates representing
shares of Series A Preferred Stock to the Corporation or any transfer agent of
the Corporation in the case of conversion pursuant to Section B.2.(e)(ii)) the
Corporation shall issue and deliver to or upon the written order of such holder
a certificate or certificates for the number of full shares of Common Stock
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to which such holder is entitled and a check or cash with
respect to any fractional interest in a share of Common Stock as provided in
Section B.2.(e)(v). Subject to the provisions of Section B.2.(e)(vi)(C), the
person in whose name the certificate or certificates for Common Stock are to be
issued shall be deemed to have become a holder of record of such Common Stock on
the applicable Conversion Date. Upon conversion of only a portion of the number
of shares covered by a certificate representing shares of Series A Preferred
Stock surrendered for conversion (in the case of conversion pursuant to Section
B.2.(e)(i)), the Corporation shall issue and deliver to or upon the written
order of the holder of the certificate so surrendered for conversion, at the
expense of the Corporation, a new certificate covering the number of shares of
Series A Preferred Stock representing the unconverted portion of the certificate
so surrendered.
(v) FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued upon conversion of shares of Series A Preferred Stock. If
more than one share of Series A Preferred Stock shall be surrendered for
conversion at any one time by the same holder or shall be held by the same
holder at the time of any automatic conversion, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of
the aggregate number of shares so surrendered or held, as the case may be.
Instead of any fractional shares of Common Stock which would otherwise be
issuable upon conversion of any shares of Series A Preferred Stock, the
Corporation shall pay out of funds legally available therefor a cash adjustment
in respect of such fractional interest, rounded to the nearest one hundredth
(1/100th) of a share, in an amount equal to that fractional interest of the then
Current Market Price (as defined in Section B.2.(e)(viii) below), rounded to the
nearest cent ($.01).
(vi) COMMON STOCK CONVERSION PRICE ADJUSTMENTS. The Conversion
Price shall be subject to adjustment from time to time as follows:
(A) STOCK DIVIDENDS, SUBDIVISIONS, RECLASSIFICATIONS OR
COMBINATIONS. If the Corporation shall (x) declare a dividend or make a
distribution on its Common Stock in shares of its Common Stock, (y) subdivide or
reclassify the outstanding shares of Common Stock into a greater number of
shares of Common Stock or (z) combine or reclassify the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, the Conversion
Price in effect at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification shall
be adjusted to that price determined by multiplying the Conversion Price in
effect by a fraction (x) the numerator of which shall be the total number of
issued and outstanding shares of Common Stock immediately prior to such
dividend, distribution, subdivision, combination or reclassification and (y) the
denominator of which shall be the total number of issued and outstanding shares
of Common Stock immediately after such dividend, distribution, subdivision,
combination or reclassification. Successive adjustments in the Conversion Price
shall be made whenever any event specified above shall occur.
(B) ROUNDING OF CALCULATIONS; MINIMUM ADJUSTMENT. All
calculations under this Section B.2.(e)(vi) shall be made to the nearest cent
($.01) or to the nearest one hundredth (1/100th) of a share, as the case may be.
Any provision of this Section B.2.(e) to the contrary notwithstanding, no
adjustment in the Conversion Price shall be
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made if the amount of such adjustment would be less than 1% of the then current
Conversion Price until the end of one year after such adjustment would otherwise
have been required; but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate 1% of the then current Conversion
Price or more, provided that if the events giving rise to such adjustments occur
within three months of each other, then such adjustments shall be calculated as
if these events giving rise to them had occurred simultaneously on the date of
the first such event.
(C) TIMING OF ISSUANCE OF ADDITIONAL COMMON STOCK UPON
CERTAIN ADJUSTMENTS. In any case in which the provisions of this Section
B.2.(e)(vi) shall require that an adjustment shall become effective immediately
after a record date for an event, the Corporation may defer until the occurrence
of such event (x) issuing to the holder of any share of Series A Preferred Stock
converted after such record date and before the occurrence of such event the
additional shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such conversion before giving effect to such adjustment and (y)
paying to such holder any amount of cash in lieu of a fractional share of Common
Stock pursuant to Section B.2.(e)(v); provided that the Corporation upon request
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares, and such cash,
upon the occurrence of the event requiring such adjustment.
(vii) CURRENT MARKET PRICE. The "Current Market Price" at any
date shall mean, in the event the Common Stock is publicly traded, the average
of the daily closing prices per share of such equity security for the 20
consecutive trading days ending on the trading day immediately before such date
(as adjusted for any stock dividend, split, combination or reclassification that
took effect during such 20 trading day period). The closing price for each day
shall be the last reported sale price regular way or, in case no such reported
sale takes place on such day, the average of the last closing bid prices regular
way, in either case on the principal national securities exchange on which such
equity security is listed or admitted to trading, or if not listed or admitted
to trading on any national securities exchange, the closing bid price for such
day reported by NASDAQ, if such equity security is traded over-the-counter and
quoted in the National Market System, or if such equity security is so traded,
but not so quoted, the average of the closing bid prices of such equity security
as reported by NASDAQ or any comparable system or, if such equity security is
not listed on NASDAQ or any comparable system, the average of the closing bid
prices as furnished by two members of the National Association of Securities
Dealers, Inc., selected in good faith from time to time by the Board of
Directors of the Corporation for that purpose. If such equity security is not
traded in such manner that the quotations referred to above are available for
the period required hereunder, Current Market Price per share of such equity
security shall be deemed to be the fair value as determined in good faith by the
Board of Directors of the Corporation, irrespective of any accounting treatment.
(viii) STATEMENT REGARDING ADJUSTMENTS. Whenever the
Conversion Price shall be adjusted as provided in Section B.2.(e)(vi), the
Corporation shall forthwith file, at the office of any transfer agent for the
Series A Preferred Stock and at the principal office of the
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Corporation, a statement showing in detail the method of calculation of such
adjustment, the facts requiring such adjustment and the Conversion Price that
shall be in effect after such adjustment, and the Corporation shall also cause a
copy of such statement to be sent by mail, first class postage prepaid, to each
holder of shares of Series A Preferred Stock at its address appearing on the
Corporation's records. Each such statement shall be signed by the Corporation's
chief financial officer. Where appropriate, such copy may be given in advance
and may be included as part of a notice required to be mailed under the
provisions of Section B.2.(e)(ix).
(ix) NOTICE TO HOLDERS. In the event the Corporation shall
propose to take any action of the type described in Section B.2.(e)(vi)(A)or
B.2.(e)(x), the Corporation shall give notice to each holder of shares of Series
A Preferred Stock in the manner set forth in Section B.2.(e)(viii), which notice
shall specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place. Such notice shall also
set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at
the date of such notice) on the Conversion Price and the number, kind or class
of shares or other securities or property which shall be deliverable upon
conversion of shares of Series A Preferred Stock. In the case of any action
which would require the fixing of a record date, such notice shall be given at
least ten calendar days prior to the date so fixed, and in the case of all other
action, such notice shall be given at least 15 calendar days prior to the taking
of such proposed action. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of any such action.
(x) MERGERS, ETC. In the event the Corporation shall be a
party to any transaction (including, without limitation, a merger,
consolidation, sale, lease or transfer of all or substantially all of its
assets, reclassification of the Common Stock or reorganization of the Company)
as a result of which shares of Common Stock shall be converted into the right to
receive stock, securities or other property (including cash or any combination
thereof), each share of Series A Preferred Stock shall thereafter be convertible
into the kind and amount of shares of stock and other securities and property
receivable (including cash) upon the consummation of such transaction by a
holder of that number of shares of Common Stock, or fraction thereof, into which
one share of Series A Preferred Stock was convertible immediately prior to such
transaction.
(xi) TREASURY STOCK. For the purposes of this Section B.2(e),
the sale or other disposition of any shares of Common Stock theretofore held in
the Corporation's treasury shall be deemed to be an issuance thereof.
(xii) COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any shares of Series A Preferred
Stock; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in a name other than that of the
holder of the shares of Series A Preferred Stock in respect of which such shares
are being issued.
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(xiii) DIVIDENDS UPON CONVERSION. In connection with any
conversion of shares of Series A Preferred Stock, the Corporation shall pay
accrued and unpaid dividends thereon in accordance with the provisions of
Section B.2.(f)(iv).
(f) DIVIDENDS.
(i) GENERAL.
(A) Subject to the rights of the holders of any other
series of Preferred Stock ranking senior to or on a parity with the Series A
Preferred Stock with respect to dividends and any other class or series of
capital stock of the Corporation ranking senior to or on a parity with the
Series A Preferred Stock with respect to dividends, other than the Common Stock,
the holders of the Series A Preferred Stock shall be entitled to receive, when
and as declared by the Board of Directors, cumulative dividends per share of
Series A Preferred Stock at the rate per annum of (1) $1.20, during the period
commencing on the date of original issuance of any shares of Series A Preferred
Stock and ending on November 9, 1995, (2) $1.60, during the period commencing on
November 10, 1995, and ending on November 9, 1996, and (3) $2.00, during the
period commencing on November 10, 1996, and ending on November 9, 1997.
(B) Dividends on the Series A Preferred Stock will
accrue on each February 9, May 9, August 9 and November 9, occurring after the
date of original issuance (each such date being referred to herein as an
"Accrual Date" and the three-month period or portion thereof, as the case may
be, ending on an Accrual Date being referred to herein as an "Accrual Period").
Dividends will accrue from the date of original issuance. Dividends will be paid
(when and as declared by the Board of Directors of the Corporation) annually, in
the arrears, on November 9, 1995, November 9, 1996, and November 9, 1997. Each
such dividend shall be paid to the holders of record of shares of the Series A
Preferred Stock as they appear on the stock register of the Corporation on such
record date not exceeding 45 nor less than ten calendar days preceding the
payment date thereof, as shall be fixed by the Board of Directors of the
Corporation. Dividends on account of arrears for any past dividend periods may
be declared and paid at any time, without reference to any regular dividend
payment date, to holders of record on such date, not exceeding 45 nor less than
ten calendar days preceding the payment date thereof, as may be fixed by the
Board of Directors of the Corporation. Holders of shares of Series A Preferred
Stock at the close of business on a dividend payment record date will be
entitled to receive the dividend payable with respect to such shares on the
corresponding dividend payment date notwithstanding the conversion thereof or
the Corporation's default on payment of the dividend due on such dividend
payment date. However, for shares of Series A Preferred Stock surrendered for
conversion during the period from the close of business on any dividend payment
record date to the opening of business on the corresponding dividend payment
date, the Corporation shall only be required to pay the dividend to the holder
of such shares on the dividend payment record date. Except as so provided above
and in Section B.2.(f)(iv) below, no payment or adjustment will be made on
account of accrued or unpaid dividends upon conversion of shares of Series A
Preferred Stock. Holders of shares of Series A Preferred Stock called for
redemption on a redemption date falling between a dividend payment record date
and the dividend payment date shall, in lieu of receiving such dividend on the
dividend payment date,
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receive such dividend payment on the redemption payment date (unless such
holders convert such shares in accordance with this Section B.2 of this Article
Fourth).
(C) The Corporation shall pay the dividends on the
Series A Preferred Stock described in Section B.2.(f)(i)(A), at the
Corporation's option and in its sole discretion, out of funds legally available
therefor (1) in cash, (2) in shares of Common Stock, such that the number of
shares of Common Stock to be distributed as a dividend with respect to the
portion of the dividend attributable to each Accrual Period shall be equal to
the number obtained by dividing the dollar amount of the portion of the dividend
attributable to such Accrual Period by the greater of (I) the Current Market
Price of the Common Stock on the tenth trading day immediately preceding the
applicable Accrual Date and (II) $2.00 (as shall be equitably adjusted to
reflect any stock dividend, stock distribution, stock split or reverse stock
split, combination of shares, subdivision of shares or reclassification of
shares with respect to the Common Stock), or (III) in any combination of cash
and shares of Common Stock that the Corporation may determine in its sole
discretion, with the number of shares of Common Stock to be distributed in
connection therewith to be calculated on the basis set forth in Section
B.2.(f)(i)(C)(2).
(D) No fractional shares of Common Stock or scrip shall
be issued upon payment of any dividends in shares of Common Stock. If more than
one share of Series A Preferred Stock shall be held by the same holder at the
time of any dividend payment date, the number of full shares of Common Stock
issuable upon payment of such dividends shall be computed on the basis of the
aggregate dividend amount that the Corporation has determined to pay in Common
Stock shares. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon payment of such dividends, the Corporation shall pay
out of funds legally available therefor a cash adjustment in respect of such
fractional interest, rounded to the nearest one hundredth (1/100th) of a share,
in an amount equal to that fractional interest of the then Current Market Price,
rounded to the nearest cent ($.01).
(E) Notwithstanding the dividend rate otherwise
applicable pursuant to Section B.2.(f)(i)(C)and notwithstanding any other
provision of this Section B.2 of this Article Fourth to the contrary, in the
event the Corporation pays any dividends in shares of Common Stock and pursuant
to the provisions of Section B.2.(f)(i)(C) the Current Market Price used in the
calculation of the number of shares payable in respect of such dividends in
respect of any Accrual Period is less than $2.00, as shall be equitably adjusted
to reflect any stock dividend, stock distribution, stock split or reverse stock
split, combination of shares, subdivision of shares or reclassification of
shares with respect to the Common Stock (and, therefore, pursuant to and for
purposes of Section B.2.(f)(i)(C), deemed to be equal to $2.00, as so adjusted),
payment of any such dividends in shares of Common Stock calculated pursuant
thereto shall constitute payment in full of any such dividends.
(ii) ALLOCATION OF DIVIDENDS. Dividends on the Series A
Preferred Stock, if paid, or if declared and set apart for payment, must be paid
or declared and set apart for payment on all outstanding shares of Series A
Preferred Stock contemporaneously. In the event dividends on the Series A
Preferred Stock and any other series of Preferred Stock ranking on a parity
therewith in respect thereto or any other class or series of capital stock of
the
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Corporation ranking on a parity therewith in respect thereto are declared and
paid in an amount less than all accumulated and current dividends on all of such
shares, the total amount declared and paid shall be allocated among all of such
shares so that the per share dividend to be declared and paid on each share is
the same percentage of the sum of the accumulated dividends for each such share.
In the event dividends are declared and paid on the Series A Preferred Stock in
a combination of cash and shares of Common Stock, the percentage of the dividend
paid in cash and the percentage of the dividend paid in stock must be the same
for each share of Series A Preferred Stock.
(iii) DIVIDEND PRIORITIES. The Corporation shall not declare
or pay any distributions to the holders of the Common Stock or any other class
or series of capital stock ranking junior to the Series A Preferred Stock in
respect of dividends during any period of time in which any shares of Series A
Preferred Stock are outstanding or in which any dividends payable on any shares
of Series A Preferred Stock have not been declared and paid in full. In this
Section B.2.(f)(iii), "distribution" means the transfer of cash or property
without consideration, whether by way of dividend or otherwise (except a
dividend solely in shares of Common Stock), or the purchase or redemption by the
Corporation of shares of Common Stock or any other shares of capital stock of
the Corporation ranking junior to the Series A Preferred Stock in respect of
dividends for cash or property, but does not include the repurchase by the
Corporation of shares from an officer, director, employee or consultant of the
Corporation.
(iv) DIVIDENDS ON CONVERSION OR REDEMPTION.
(A) Immediately prior to the conversion of any shares of
Series A Preferred Stock into Common Stock or the redemption of any shares of
Series A Preferred Stock, all accrued and unpaid dividends payable pursuant to
Section B.2.(f) (whether or not declared) on such shares so converted or
redeemed, as the case may be, (prorated until the date of conversion or
redemption, as the case may be, in respect of the Accrual Period in which such
date occurs) shall be payable, at the Corporation's option and in its sole
discretion, out of funds legally available therefor (1) in cash, (2) in shares
of Common Stock, such that the number of shares of Common Stock to be
distributed with respect to the portion of the dividend attributable to each
Accrual Period shall be equal to the number obtained by dividing the dollar
amount of the portion of the dividend attributable to such Accrual Period by the
greater of (I) the Current Market Price of the Common Stock on the tenth trading
day immediately preceding the applicable Accrual Date and (II) $2.00 (as shall
be equitably adjusted to reflect any stock dividend, stock distribution, stock
split or reverse stock split, combination of shares, subdivision of shares or
reclassification of shares with respect to the Common Stock), or (III) in any
combination of cash and shares of Common Stock that the Corporation may
determine in its sole discretion, with the number of shares of Common Stock to
be distributed in connection therewith to be calculated on the basis set forth
in Section B.2.(f)(A)(2).
(B) No fractional shares of Common Stock or scrip shall
be issued upon payment of any dividends in shares of Common Stock upon
conversion or redemption of any shares of Series A Preferred Stock. If more than
one share of Series A Preferred Stock shall be surrendered for conversion at any
one time by the same holder, shall be held by the same holder at the time of any
automatic conversion or shall be held by the same
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holder at the time of any redemption, as the case may be, the number of full
shares of Common Stock issuable upon payment of such dividends shall be computed
on the basis of the aggregate dividend amount that the Corporation has
determined to pay in Common Stock shares. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon payment of such dividends,
the Corporation shall pay out of funds legally available therefor a cash
adjustment in respect of such fractional interest, rounded to the nearest one
hundredth (1/100th) of a share, in an amount equal to that fractional interest
of the then Current Market Price, rounded to the nearest cent ($.01).
(C) Notwithstanding the dividend rate otherwise
applicable pursuant to Section B.2.(f)(i)(A) and notwithstanding any other
provision of this Section B.2 of this Article Fourth to the contrary, in the
event the Corporation pays any dividends in shares of Common Stock upon
conversion or redemption of any shares of Series A Preferred Stock and pursuant
to the provisions of Section B.2.(f)(iv)(A) the Current Market Price used in the
calculation of the number of shares payable in respect of such dividends in
respect of any Accrual Period is less than $2.00, as shall be equitably adjusted
to reflect any stock dividend, stock distribution, stock split or reverse stock
split, combination of shares, subdivision of shares or reclassification of
shares with respect to the Common Stock (and, therefore, pursuant to and for
purposes of Section B.2.(f)(iv)(A), deemed to be equal to $2.00, as so
adjusted), payment of any such dividends in shares of Common Stock calculated
pursuant thereto shall constitute payment in full of any such dividends.
(g) REDEMPTION.
(i) GENERAL.
(A) At any time after November 9, 1995, the Corporation
may redeem in whole or in part the then outstanding shares of Series A Preferred
Stock; provided, however, that the Corporation may not redeem any shares of
Series A Preferred Stock unless the Current Market Price of the Common Stock on
a date (which date may be prior to, on or after November 9, 1995) that is within
ten trading days of the date notice of redemption is given pursuant to Section
equals or exceeds $5.17 (as shall be equitably adjusted to reflect any stock
dividend, stock distribution, stock split or reverse stock split, combination of
shares, subdivision of shares or reclassification of shares with respect to the
Common Stock).
(B) The Corporation shall redeem the Series A Preferred
Stock by paying a redemption amount equal to $20.00 per share of Series A
Preferred Stock (the "Redemption Price"), at the Corporation's option and in its
sole discretion, out of funds legally available therefor (1) in cash, (2) in
shares of Common Stock, such that the number of shares of Common Stock to be
distributed in payment of the Redemption Price shall be equal to the number
obtained by dividing the dollar amount of the Redemption Price by the lesser of
(I) the Current Market Price of the Common Stock on the tenth trading day
immediately preceding the date notice of redemption is given pursuant to Section
B.2.(g)(iii) and (II) the Conversion Price on the redemption payment date, or
(3) in any combination of cash and shares of Common Stock that the Corporation
may determine in its sole discretion, with the number of shares of Common
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Stock distributed in connection therewith to be calculated on the basis set
forth in Section B.2.(f)(iv)(B)(2).
(C) No fractional shares of Common Stock or scrip shall
be issued upon payment of the Redemption Price or any portion thereof in shares
of Common Stock. If more than one share of Series A Preferred Stock shall be
held by the same holder at the time of any redemption, the number of full shares
of Common Stock issuable upon payment of the Redemption Price, or any portion
thereof, shall be computed on the basis of the aggregate Redemption Price that
the Corporation has determined to pay in Common Stock shares. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon payment
of any such Redemption Price, the Corporation shall pay out of funds legally
available therefor a cash adjustment in respect of such fractional interest,
rounded to the nearest one hundredth (1/100th) of a share, in an amount equal to
that fractional interest of the then Current Market Price, rounded to the
nearest cent ($.01).
(D) In connection with any redemption of shares of
Series A Preferred Stock, in addition to the Redemption Price, the Corporation
shall pay accrued and unpaid dividends thereon in accordance with the provisions
of Section B.2.(f)(iv).
(E) The Redemption Price payable pursuant hereto shall
be equitably adjusted to reflect any stock dividend, stock distribution, stock
split or reverse stock split, combination of shares, subdivision of shares or
reclassification of shares with respect to any shares of the Series A Preferred
Stock.
(ii) PARTIAL REDEMPTION. In case of the redemption of only
part of the Series A Preferred Stock at the time outstanding, at the option of
the Board of Directors, such redemption shall be made pro rata or the shares to
be redeemed shall be chosen by lot in such manner as may be prescribed by the
Board of Directors.
(iii) NOTICE.
(A) Notice of any proposed redemption of Series A
Preferred Stock shall be given by the Corporation by mailing a copy of such
notice by first class mail, postage prepaid, not less than 30 nor more than 90
calendar days prior to the date fixed for such redemption to each holder of
record of the shares to be redeemed at his address appearing on the books of the
Corporation.
(B) Each such notice shall state, among other things,
(1) the redemption payment date, (2) whether the Redemption Price will be paid
in shares of Common Stock or cash, or in a combination of Common Stock and cash,
(3) that dividends on the shares to be redeemed shall cease to accrue following
such redemption payment date, and (4) that dividends accrued to and including
the date fixed for redemption will be paid as specified in said notice.
(C) Notice having been mailed as aforesaid, from and
after the redemption payment date, unless the Corporation shall be in default in
providing money or
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Common Stock for the payment of the Redemption Price (or for any accrued and
unpaid dividends to and including the redemption payment date), (1) dividends on
the shares of Series A Preferred Stock so called for redemption shall cease to
accrue, (2) said shares shall be deemed no longer outstanding, and (3) all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation any monies or Common Stock payable upon
redemption without interest thereon) shall cease except for the rights
applicable to any Common Stock paid pursuant to the redemption.
(iv) CONVERSION PRIOR TO REDEMPTION. The holder of any shares
of Series A Preferred Stock to whom notice of redemption has been given pursuant
hereto may pursuant to the provisions of Section B.2.(f) hereof elect to convert
the shares of Series A Preferred Stock for which notice of redemption has been
given at any time on or prior to the tenth calendar day immediately preceding
the redemption payment date.
(h) REACQUIRED SHARES. Any shares of Series A Preferred Stock
redeemed, purchased, converted or otherwise acquired by the Corporation in any
manner whatsoever shall not be reissued as part of such series and shall be
retired promptly after the acquisition thereof. All such shares shall upon their
retirement and the filing of any certificate required in connection therewith
pursuant to the Delaware General Corporation Law become authorized but unissued
shares of Preferred Stock.
C. NUMBER OF AUTHORIZED SHARES.
The number of authorized shares of any class of capital stock of the
Corporation may be increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a majority
of the shares of capital stock of the Corporation entitled to vote on matters
submitted to a vote of the stockholders of the Corporation, and no class vote
shall be required in connection therewith.
D. NO PREEMPTIVE RIGHTS.
No holder of shares of stock of the Corporation shall have any preemptive
or other right, except as such rights are expressly provided herein or by
contract, to purchase or subscribe for or receive any shares of any class, or
series thereof, of stock of the Corporation, whether now or hereafter
authorized, or any warrants, options, bonds, debentures or other securities
convertible into, exchangeable for or carrying any right to purchase any shares
of any class, or series thereof, of stock; but such additional shares of stock
and such warrants, options, bonds, debentures or other securities convertible
into, exchangeable for or carrying any right to purchase any shares of any
class, or series thereof, of stock may be issued or disposed of by the Board of
Directors to such persons, and on such terms and for such lawful consideration,
as in its discretion it shall deem advisable or as the Corporation shall have by
contract agreed.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: Elections of directors need not be by written ballot unless the
bylaws of the Corporation shall so provide.
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SEVENTH:
A. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. If the Delaware General Corporation Law hereafter is amended
to authorize the further elimination or limitation of the liability of
directors, then the liability of a director of the Corporation, in addition to
the limitation on personal liability provided herein, shall be limited to the
fullest extent permitted by the amended Delaware General Corporation Law. Any
repeal or modification of this paragraph by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation existing at the time of such
repeal or modification.
B. The Corporation shall indemnify any director or officer to the full extent
permitted by Delaware law.
EIGHTH: In furtherance of, and not in limitation of, the powers conferred
by statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the Corporation, or adopt new bylaws, without any action on
the part of the stockholders.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
of Incorporation, which restates and integrates and also amends the
Corporation's Restated Certificate of Incorporation as heretofore amended, after
having been duly adopted by the Corporation in accordance with the provisions of
Sections 242 and 245 of the Delaware General Corporation Law, to be signed by
its duly authorized officer on this 20th day of June, 1995.
LIFECELL CORPORATION
By /s/ PAUL M. FRISON
Paul M. Frison, Chairman of the Board,
President and Chief Executive Officer
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
LIFECELL CORPORATION
LifeCell Corporation, a Delaware corporation (the "Corporation"), does
hereby certify:
That the amendment set forth below to the Corporation's Restated
Certificate of Incorporation was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware:
I. The first paragraph of Article FOURTH of the Corporation's Restated
Certificate of Incorporation is hereby deleted and replaced in its entirety by
the following:
FOURTH: The total number of shares of capital stock that the Corporation
shall have authority to issue is 27,000,000, of which 2,000,000 shares of the
par value of $.001 per share shall be a class designated Preferred Stock
("Preferred Stock") and 25,000,000 shares of the par value of $.001 per share
shall be a class designated Common Stock ("Common Stock").
<PAGE>
IN WITNESS WHEREOF, LifeCell Corporation has caused this Certificate to be
signed by its duly authorized officer this 20th day of May, 1996.
LIFECELL CORPORATION
By /s/ PAUL M. FRISON
Paul M. Frison, President
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LIFECELL CORPORATION
CERTIFICATE OF DESIGNATION
OF SERIES B PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
LifeCell Corporation (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Board of Directors of the Corporation, pursuant to a
unanimous consent of the Board of Directors dated as of November 6, 1996, duly
adopted the following resolution:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Corporation by the provisions of the Restated
Certificate of Incorporation of the Corporation, out of the authorized but
unissued shares of Preferred Stock of the Corporation this Board of Directors
hereby creates a series of the Preferred Stock, par value $.001 per share (the
"Preferred Stock"), of the Corporation, and this Board of Directors hereby fixes
the powers, designations, preferences and relative, participating, optional or
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof (in addition to the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, set forth in the
Restated Certificate of Incorporation of the Corporation which are applicable to
Preferred Stock of all series) as follows:
1. DESIGNATION. The designation of the series shall be "Series B Preferred
Stock" (the "Series B Preferred Stock").
2. NUMBER. The number of shares constituting the Series B Preferred Stock
shall be 182,205.
3. VOTING RIGHTS.
(a) GENERAL. Each share of Series B Preferred Stock shall entitle
the holder thereof to one vote for each share of Common Stock, $.001 par value
per share, of the Corporation (the "Common Stock"), into which such share of
Series B Preferred Stock is convertible on the record date for such vote on all
matters submitted to a vote of the stockholders of the Corporation.
<PAGE>
(b) DIRECTORS. At any meeting of the stockholders of the Corporation
held for the election of directors, the holders of Series B Preferred Stock,
voting separately as a series, shall be entitled to elect three members of the
Board of Directors of the Corporation.
(c) OTHER. Without the vote or consent of the holders of at least a
majority of the shares of Series B Preferred Stock then outstanding, the
Corporation may not authorize or create any class or series of capital stock
ranking prior to or on a parity with the Series B Preferred Stock either as to
redemption or liquidation.
4. LIQUIDATION.
(a) PREFERENCE. The Series B Preferred Stock shall rank on a parity
with the Series A Preferred Stock, $.001 par value per share, of the Corporation
(the "Series A Preferred Stock"), with respect to liquidation. All capital stock
of the Corporation other than the Series A Preferred Stock and the Series B
Preferred Stock is referred to herein as the "Junior Securities". In the event
of any liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, each holder of record of the issued and
outstanding shares of Series B Preferred Stock shall be entitled to receive, out
of the assets of the Corporation available for distribution to the holders of
shares of Series B Preferred Stock, prior and in preference to any distribution
of any of the assets of the Corporation to the holders of Junior Securities, an
amount in cash equal to the aggregate Liquidation Value (as defined below) of
all shares of Series B Preferred Stock then held by such holder, plus an amount
equal to all dividends accrued and unpaid on such shares (whether or not
declared) up to the date fixed for distribution. If, upon such liquidation,
dissolution or winding up of the affairs of the Corporation, the assets of the
Corporation distributable among the holders of Series B Preferred Stock, the
Series A Preferred Stock and any other series of Preferred Stock ranking on a
parity therewith in respect thereto or any class or series of capital stock of
the Corporation ranking on a parity therewith in respect thereto shall be
insufficient to permit the payment in full to all such holders of shares of the
preferential amounts payable to them, then the entire assets of the Corporation
available for distribution to such holders of such shares shall be distributed
ratably among such holders in proportion to the respective amounts that would be
payable per share if such assets were sufficient to permit payment in full. Not
less than 30 days prior to the payment date stated therein, the Corporation
shall mail written notice of any such liquidation, dissolution or winding up to
each record holder of the Series B Preferred Stock, setting forth in reasonable
detail the amount of proceeds to be paid with respect to each share of Series B
Preferred Stock and each share of Common Stock in connection with such
liquidation, dissolution or winding up.
(b) After payment of the full amount to which they are entitled upon
liquidation pursuant to Section 4(a), the holders of shares of Series B
Preferred Stock shall be entitled to participate ratably in any distribution of
any remaining assets of the Corporation legally available for distribution to
the holders of Common Stock with the holders of record of the then issued and
outstanding shares of Common Stock, as a single class, on the basis of the
number of shares held by each such holder of Series B Preferred Stock (for the
purposes of this Section 4(b), treating such shares of Series B
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Preferred Stock as if converted into shares of Common Stock pursuant to the
provisions of this Certificate).
(c) LIQUIDATION VALUE; ADJUSTMENTS. "The Liquidation Value" of any
particular share of Series B Preferred Stock as of any particular date shall
equal $100.00. The Liquidation Value shall be equitably adjusted by the
Corporation to reflect any stock dividend, stock distribution, stock split or
reverse stock split, combination of shares, subdivision of shares or
reclassification of shares with respect to the Series B Preferred Stock.
5. CONVERSION RIGHTS. The Series B Preferred Stock shall be convertible as
follows:
(a) OPTIONAL CONVERSION. Subject to and upon compliance with the
provisions of this Section 5, the holder of any shares of Series B Preferred
Stock shall have the right at such holder's option, at any time or from time to
time, and without the payment of any additional consideration therefor, to
convert any of such shares of Series B Preferred Stock into fully paid and
nonassessable shares of Common Stock at the Conversion Price (as defined in
Section 5(c) below) in effect on any Conversion Date (as defined in Section 5(d)
below) upon the terms hereinafter set forth.
(b) AUTOMATIC CONVERSION. Each outstanding share of Series B
Preferred Stock shall automatically be converted, without any further act of the
Corporation or its stockholders, at the Conversion Price then in effect, into
fully paid and nonassessable shares of Common Stock on the earlier to occur of
the following:
(i) the date of the closing of an underwritten public offering
pursuant to an effective registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), covering the offering and sale
of Common Stock, or of any equity security that as a part of a unit
includes Common Stock, for the account of the Corporation, in which the
aggregate gross proceeds received by the Corporation, net of any
underwriter discounts or commissions, equals or exceeds $20,000,000, and
in which the public offering price per share of Common Stock equals or
exceeds $9.30 (as equitably adjusted to reflect any stock dividend, stock
distribution, stock split or reverse stock split, combination of shares,
subdivision of shares or reclassification of shares); and
(ii) the date first occurring after the closing of an
underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offering and sale of
Common Stock, or of any equity security that as a part of a unit includes
Common Stock, for the account of the Corporation, in which the aggregate
gross proceeds received by the Corporation, net of any underwriter
discounts or commissions, equals or exceeds $20,000,000, on which the
Current Market Price (as defined in the first sentence of Section 5(j)
below) of the Common Stock equals or exceeds $9.30 (as equitably adjusted
to reflect any stock dividend, stock distribution, stock split or reverse
stock split, combination of shares, subdivision of shares or
reclassification of shares).
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(c) NUMBER OF CONVERSION SHARES. Each share of Series B Preferred
Stock shall be convertible pursuant to Sections 5(a) and 5(b) into a number of
shares of Common Stock determined by dividing (i) the Liquidation Value (as it
may be adjusted pursuant to Section 4(c) hereof) by (ii) the Conversion Price in
effect on any Conversion Date. For the purposes of this Section 5, the term
"Conversion Price" shall initially mean $3.10. In order to prevent dilution of
the conversion rights granted under this Section 5, the Conversion Price shall
be subject to adjustment from time to time pursuant to Section 5(f).
(d) CONVERSION PROCEDURES. The holder of any shares of Series B
Preferred Stock may exercise the conversion right specified in Section 5(a) by
surrendering to the Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted, accompanied by
written notice specifying the number of shares to be converted. Upon the
occurrence of automatic conversion pursuant to Section 5(b), the outstanding
shares of Series B Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent; provided that the Corporation shall not be obligated to issue to any
holder certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Series B Preferred
Stock are delivered either to the Corporation or any transfer agent of the
Corporation. Conversion shall be deemed to have been effected on the date when
delivery of notice of an election to convert and of certificates for shares
being converted is made or on a date specified in Section 5(b), as the case may
be, and such date is referred to herein as the "Conversion Date". Subject to the
provisions of Section 5(f)(iv), as promptly as practicable thereafter (and after
surrender of the certificate or certificates representing shares of Series B
Preferred Stock to the Corporation or any transfer agent of the Corporation in
the case of conversion pursuant to Section 5(b)) the Corporation shall issue and
deliver to or upon the written order of such holder a certificate or
certificates for the number of full shares of Common Stock to which such holder
is entitled and a check or cash with respect to any fractional interest in a
share of Common Stock as provided in Section 5(e). Subject to the provisions of
Section 5(f)(iv), the person in whose name the certificate or certificates for
Common Stock are to be issued shall be deemed to have become a holder of record
of such Common Stock on the applicable Conversion Date. Upon conversion of only
a portion of the number of shares covered by a certificate representing shares
of Series B Preferred Stock surrendered for conversion (in the case of
conversion pursuant to Section 5(a)), the Corporation shall issue and deliver to
or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Series B Preferred Stock representing the unconverted
portion of the certificate so surrendered.
(e) FRACTIONAL SHARES. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of Series B Preferred Stock. If more
than one share of Series B Preferred Stock shall be surrendered for conversion
at any one time by the same holder or shall be held by the same holder at the
time of any automatic conversion, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares so
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<PAGE>
surrendered or held, as the case may be. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of
Series B Preferred Stock, the Corporation shall pay out of funds legally
available therefor a cash adjustment in respect of such fractional interest,
rounded to the nearest one hundredth (1/100th) of a share, in an amount equal to
that fractional interest of the then Current Market Price (as defined in Section
5(j) below), rounded to the nearest cent ($.01).
(f) CONVERSION PRICE ADJUSTMENTS. The Conversion Price shall be
subject to adjustment from time to time as follows:
(i) If and whenever on or after the date of the original
issuance of the Series B Preferred Stock, the Corporation issues or sells,
or in accordance with Section 5(g) is deemed to have issued or sold, any
shares of its Common Stock (other than Excluded Stock) for a consideration
per share less than the Conversion Price in effect immediately prior to
the time of such issue or sale, or deemed issue or sale then immediately
upon such issue or sale or deemed issue or sale the Conversion Price shall
be reduced to the Conversion Price determined by dividing (A) the sum of
(1) the product derived by multiplying the Conversion Price in effect
immediately prior to such issue or sale or deemed issue or sale by the
number of shares of Common Stock Deemed Outstanding immediately prior to
such issue or sale or deemed issue or sale, plus (2) the consideration, if
any, received by the Corporation upon such issue or sale or deemed issue
or sale, by (B) the number of shares of Common Stock Deemed Outstanding
immediately after such issue or sale or deemed issue or sale.
(ii) For purposes of this Section 5, "Excluded Stock" means
(A) Common Stock issued or reserved for issuance by the Company as a
dividend on Preferred Stock or upon any subdivision or split-up of the
outstanding shares of any shares of capital stock of the Company or any
recapitalization thereof, or upon conversion of any shares of Preferred
Stock, (B) Common Stock issuable pursuant to any options, warrants or
other rights that are outstanding on the effective date of this
Certificate, (C) Common Stock issued or issuable in connection with a
Board-approved acquisition of a business by the Company as a result of
which the Company owns in excess of 50% of the voting power of such
business, (D) Common Stock issued or issuable to employees, officers,
consultants, directors or vendors of the Company or pursuant to any
Board-approved employee, officer, consultant or director benefit plan,
including without limitation any stock option plan, and (E) Common Stock
issued or issuable to (1) banks, savings and loan associations, equipment
lessors or similar lending institutions in connection with such entities
providing Board-approved credit facilities or equipment financings to the
Company or (2) any party to any technology transfer agreement,
distribution agreement, marketing agreement or any other agreement similar
thereto, with the Company, as approved by the Board. For purposes of this
Section 5, "Common Stock Deemed Outstanding" means, at any given time, the
number of shares of Common Stock actually outstanding at such time, plus
the number of shares of Common Stock deemed to be outstanding pursuant to
Sections 5(g)(i) and 5(g)(ii) hereof regardless of
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whether Options (as defined below) or Convertible Securities (as defined
below) are actually exercised or converted at such time.
(iii) All calculations under this Section 5(f) shall be made
to the nearest cent ($.01) or to the nearest one hundredth (1/100th) of a
share, as the case may be. Any provision of this Section 5 to the contrary
notwithstanding, no adjustment in the Conversion Price shall be made if
the amount of such adjustment would be less than 1% of the then current
Conversion Price until the end of the calendar year after such adjustment
would otherwise have been required; but any such amount shall be carried
forward and an adjustment with respect thereto shall be made at the time
of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
1% of the then current Conversion Price or more, provided that if the
events giving rise to such adjustments occur within three months of each
other, then such adjustments shall be calculated as if these events giving
rise to them had occurred simultaneously on the date of the first such
event.
(iv) In any case in which the provisions of this Section 5(f)
shall require that an adjustment shall become effective immediately after
a record date for an event, the Corporation may defer until the occurrence
of such event (A) issuing to the holder of any share of Series B Preferred
Stock converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment required by such event over and above the
shares of Common Stock issuable upon such conversion before giving effect
to such adjustment and (B) paying to such holder any amount of cash in
lieu of a fractional share of Common Stock pursuant to Section 5(e);
provided that the Corporation upon request shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares, and such cash, upon the occurrence of the
event requiring such adjustment.
(g) EFFECT ON CONVERSION PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Conversion Price under Section 5(f), the following
shall be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Corporation in any
manner grants or sells any rights to subscribe for or purchase Common
Stock or Convertible Securities ("Options") and the price per share for
which Common Stock is issuable upon the exercise of such Options, or upon
conversion or exchange of any stock or securities (directly or indirectly)
convertible into or exchangeable for Common Stock ("Convertible
Securities") issuable upon exercise of such Options, is less than the
Conversion Price in effect immediately prior to the time of the granting
or sale 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
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to be outstanding and to have been issued and sold by the Corporation at
the time of the granting or sale of such Options for such price per share.
For purposes of this paragraph, the "price per share for which Common
Stock is issuable" shall be determined by dividing (A) the total amount,
if any, received or receivable by the Corporation as consideration for the
granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon 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 to the Corporation upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by (B) 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. No further
adjustment of the Conversion Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when
Common Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. If the Corporation in
any manner issues or sells any Convertible Securities and the price per
share for which Common Stock is issuable upon conversion or exchange
thereof is less than the Conversion Price in effect immediately prior to
the time of such issue or sale, then the maximum number of shares of
Common Stock issuable upon conversion or exchange of such Convertible
Securities shall be deemed to be outstanding and to have been issued and
sold by the Corporation at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable" shall
be determined by dividing (A) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Corporation upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible
Securities. No further adjustment of the Conversion Price shall be made
when Common Stock is actually issued upon the conversion or exchange of
such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 5(g), no further adjustment of the
Conversion Price shall be made by reason of such issue or sale.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Options, the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities or the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock changes at any time, the Conversion
Price in effect at the time of such change shall be immediately adjusted
to the Conversion Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional
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consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold; provided that if such adjustment would
result in an increase of the Conversion Price then in effect, such
adjustment shall not be effective until 30 days after written notice
thereof has been given by the Corporation to all holders of the Series B
Preferred Stock. For purposes of this Section 5(g), if the terms of any
Option or Convertible Security which was outstanding as of the date of
issuance of the Series B Preferred Stock are changed in the manner
described in the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued as of
the date of such change.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED CONVERTIBLE
SECURITIES. Upon the expiration of any Option or the termination of any
right to convert or exchange any Convertible Security without the exercise
of any such Option or right, the Conversion Price then in effect hereunder
shall be adjusted immediately to the Conversion Price which would have
been in effect at the time of such expiration or termination had such
Option or Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued; provided that
if such expiration or termination would result in an increase in the
Conversion Price in effect, such increase shall not be effective until 30
days after written notice thereof has been given to all holders of the
Series B Preferred Stock. For purposes of this Section 5(g), the
expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series B Preferred Stock
shall not cause the Conversion Price hereunder to be adjusted unless, and
only to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued after the
date of issuance of the Series B Preferred Stock.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor shall be
deemed to be the gross amount received by the Corporation therefor (net of
any underwriter, placement agent or broker discounts and commissions). If
any Common Stock, Option or Convertible Security is issued or sold for a
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be the fair value of such
consideration, except where such consideration consists of securities, in
which case the amount of consideration received by the Corporation shall
be the Current Market Price thereof as of the date of receipt. If any
Common Stock, Option or Convertible Security is issued to the owners of
the non-surviving entity in connection with any merger in which the
Corporation is the surviving corporation, the amount of consideration
therefor shall be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to such
Common Stock, Option or Convertible Security, as the case may be. The fair
value of any consideration other than cash and securities shall be
determined jointly by the Corporation and the holders of a majority of the
outstanding Series B Preferred
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Stock. If such parties are unable to reach an agreement within a
reasonable period of time, the fair value of such consideration shall be
determined by an independent appraiser experienced in valuing such type of
consideration jointly selected by the Corporation and the holders of a
majority of the outstanding Series B Preferred Stock. The determination of
such appraiser shall be final and binding upon the parties, and the fees
and expenses of such appraiser shall be borne by the Corporation.
(vi) INTEGRATED TRANSACTIONS. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the
Option shall be deemed to have been issued for a consideration of $.01.
(vii) TREASURY SHARES. For the purpose of this Section 5, the
number of shares of Common Stock outstanding at any given time shall not
include shares owned or held by or for the account of the Corporation or
any subsidiary, and the disposition of any shares so owned or held shall
be considered an issue or sale of Common Stock.
(viii) RECORD DATE. If the Corporation takes a record of the
holders of Common Stock for the purpose of entitling them (A) to receive a
dividend or other distribution payable in Common Stock, Options or in
Convertible Securities or (B) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed
to be the date of the issue or sale of the shares of Common Stock deemed
to have been issued or sold upon the declaration of such dividend or upon
the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.
(h) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Corporation
at any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(i) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding) to insure that each of the
holders of
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Series B Preferred Stock shall thereafter have the right to acquire and receive,
in lieu of or in addition to (as the case may be) the shares of Common Stock
immediately theretofore acquirable and receivable upon the conversion of such
holder's Series B Preferred Stock, such shares of stock, securities or assets as
such holder would have received in connection with such Organic Change if such
holder had converted its Series B Preferred Stock immediately prior to such
Organic Change. In each such case, the Corporation shall also make appropriate
provisions (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding) to insure that the provisions of
this Section 5 and Sections 4, 6 and 7 hereof shall thereafter be applicable to
the Series B Preferred Stock (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity is other than
the Corporation, an immediate adjustment of the Conversion Price to the value
for the Common Stock reflected by the terms of such consolidation, merger or
sale, and a corresponding immediate adjustment in the number of shares of Common
Stock acquirable and receivable upon conversion of Series B Preferred Stock, if
the value so reflected is less than the Conversion Price in effect immediately
prior to such consolidation, merger or sale). The Corporation shall not effect
any such consolidation, merger or sale, unless prior to the consummation
thereof, the successor entity (if other than the Corporation) resulting from
consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the holders of a majority of
the Series B Preferred Stock then outstanding), the obligation to deliver to
each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
(j) CURRENT MARKET PRICE. The "Current Market Price" means as to any
security the average of the closing prices of such security's sales on all
domestic or foreign securities exchanges on which such security may at the time
be listed, or, if there have been no sales on any such exchange on any day, the
average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or, if on any such day security is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ National Market
or NASDAQ SmallCap Market, as of 4:00 P.M., New York time, on such day, or, if
on any day such security is not quoted in the NASDAQ National Market or the
NASDAQ SmallCap Market (as applicable), the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 30 days
consisting of the day as of which "Current Market Price" is being determined and
the 29 consecutive business days prior to such day; provided that if such
security is listed on any domestic securities exchange the term "business days"
as used in this sentence means business days on which such exchange is open for
trading. If at any time such security is not listed on any domestic securities
exchange or quoted in the NASDAQ National Market or the NASDAQ SmallCap Market
or the domestic over-the-counter market, the "Current Market Price" shall be the
fair value thereof determined jointly by the Corporation and the holders of
shares of Series B Preferred Stock representing a majority of the shares of
Series B Preferred Stock then outstanding; provided that if such parties are
unable to reach agreement within a reasonable period of time, such fair value
shall be determined by an appraiser jointly
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selected by the Corporation and the holders of shares of Series B Preferred
Stock representing a majority of the shares of shares of Series B Preferred
Stock then outstanding. The determination of such appraiser shall be final and
binding on the Corporation and the holders of the shares of Series B Preferred
Stock and the fees and expenses of such appraiser shall be paid by the
Corporation.
(k) STATEMENT REGARDING ADJUSTMENTS. Whenever the Conversion Price
shall be adjusted as provided in this Section 5, the Corporation shall forthwith
file, at the office of any transfer agent for the Series B Preferred Stock and
at the principal office of the Corporation, a statement showing in detail the
method of calculation of such adjustment, the facts requiring such adjustment
and the Conversion Price that shall be in effect after such adjustment, and the
Corporation shall also cause a copy of such statement to be sent by mail, first
class postage prepaid, to each holder of shares of Series B Preferred Stock at
its address appearing on the Corporation's records. Each such statement shall be
signed by the Corporation's chief financial officer. Where appropriate, such
copy may be given in advance and may be included as part of a notice required to
be mailed under the provisions of Section 5(l).
(l) NOTICE TO HOLDERS. In the event the Corporation shall propose to
take any action of the type described in this Section 5, the Corporation shall
give notice to each holder of shares of Series B Preferred Stock in the manner
set forth in Section 5(k), which notice shall specify the record date, if any,
with respect to any such action and the approximate date on which such action is
to take place. Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable upon conversion of shares of Series B Preferred
Stock. In the case of any action which would require the fixing of a record
date, such notice shall be given at least ten calendar days prior to the date so
fixed, and in the case of all other action, such notice shall be given at least
15 calendar days prior to the taking of such proposed action. Failure to give
such notice, or any defect therein, shall not affect the legality or validity of
any such action.
(m) COSTS. The Corporation shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock upon conversion of any shares of Series B Preferred
Stock; provided that the Corporation shall not be required to pay any taxes
which may be payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in a name other than that of the
holder of the shares of Series B Preferred Stock in respect of which such shares
are being issued.
(n) DIVIDENDS UPON CONVERSION. In connection with any conversion of
shares of Series B Preferred Stock, the Corporation shall pay accrued and unpaid
dividends thereon in accordance with the provisions of Section 7(d).
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(o) CERTAIN EVENTS. If any event occurs of the type contemplated by
the provisions of Section 5(f)(i) but not expressly provided for by such
provisions, then the Conversion Price shall be adjusted by the Corporation's
Board of Directors in good faith so as to protect the rights of the holders of
Series B Preferred Stock; provided that no such adjustment shall increase the
Conversion Price as otherwise determined pursuant to this Section 5 or decrease
the number of shares of Common Stock issuable upon conversion of each share of
Series B Preferred Stock.
6. PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then each holder of Series B Preferred Stock shall be
entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Common Stock acquirable upon conversion of such
holder's Series B Preferred Stock immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
7. DIVIDENDS.
(a) GENERAL.
(i) The Series B Preferred Stock shall rank on parity with the
Series A Preferred Stock with respect to dividends. During the period commencing
on the date on which the first share of Series B Preferred Stock is issued and
terminating on the fifth anniversary of such date, the holders of the Series B
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available therefor, cumulative dividends per
share of Series B Preferred Stock at the rate per annum equal to the greater of
(A), if any shares of Series A Preferred Stock are then outstanding, the per
annum rate of dividends per share of Series A Preferred Stock then payable
thereon, (B) $6.00 (as shall be equitably adjusted to reflect any stock
dividend, stock distribution, stock split or reverse stock split, combination of
shares, subdivision of shares or reclassification of shares with respect to the
Series A Preferred Stock or Series B Preferred Stock, as the case may be) and
(C) the per annum rate of dividends per share paid by the Corporation on the
Common Stock.
(ii) Dividends on the Series B Preferred Stock will accrue on
each March 31, June 30, September 30 and December 31, occurring after the date
of original issuance (each such date being referred to herein as an "Accrual
Date" and the three-month period or portion thereof, as the case may be, ending
on an Accrual Date being referred to herein as an "Accrual Period"), whether or
not such dividends have been declared, and whether or not there are funds of the
Corporation legally available for the payment of dividends, and will cease
accruing on September 30, 2001.
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Dividends will be paid (when and as declared by the Board of Directors of the
Corporation) quarterly, in arrears, on each February 15, May 15, August 15 and
November 15, occurring in 1997, 1998, 1999, 2000 and 2001. Each such dividend
shall be paid to the holders of record of shares of the Series B Preferred Stock
as they appear on the stock register of the Corporation on such record date not
exceeding 45 nor less than ten calendar days preceding the payment date thereof,
as shall be fixed by the Board of Directors of the Corporation. Dividends on
account of arrears for any past dividend periods may be declared and paid at any
time, without reference to any regular dividend payment date, to holders of
record on such date, not exceeding 45 nor less than ten calendar days preceding
the payment date thereof, as may be fixed by the Board of Directors of the
Corporation. Holders of shares of Series B Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable with respect to such shares on the corresponding dividend
payment date notwithstanding the conversion thereof or the Corporation's default
on payment of the dividend due on such dividend payment date. For shares of
Series B Preferred Stock surrendered for conversion during the period from the
close of business on any dividend payment record date to the opening of business
on the corresponding dividend payment date, the Corporation shall pay the
dividend to the holder of such shares on the dividend payment record date.
Except as so provided above and in Section 7(d) below, no payment or adjustment
will be made on account of accrued or unpaid dividends upon conversion of shares
of Series B Preferred Stock.
(iii) The Corporation shall pay the dividends on the Series B
Preferred Stock described in Section 7(a)(i), at the Corporation's option and in
its sole discretion, out of funds legally available therefor (A) in cash, (B) in
shares of Series B Preferred Stock having an aggregate Liquidation Value (as
shall be equitably adjusted to reflect any stock dividend, stock distribution,
stock split or reverse stock split, combination of shares, subdivision of shares
or reclassification of shares with respect to the Series B Preferred Stock) at
the time of such payment equal to the amount of the dividend to be paid, or (C)
in any combination of cash and shares of Series B Preferred Stock that the
Corporation may determine in its sole discretion, with the number of shares of
Series B Preferred Stock to be distributed in connection therewith to be
calculated on the basis set forth in Section 7(a)(iii)(B).
(iv) No fractional shares of Series B Preferred Stock or scrip
shall be issued upon payment of any dividends in shares of Series B Preferred
Stock. If more than one share of Series B Preferred Stock shall be held by the
same holder at the time of any dividend payment date, the number of full shares
of Series B Preferred Stock issuable upon payment of such dividends shall be
computed on the basis of the aggregate dividend amount that the Corporation has
determined to pay in Series B Preferred Stock shares. Instead of any fractional
shares of Series B Preferred Stock which would otherwise be issuable upon
payment of such dividends, the Corporation shall pay out of funds legally
available therefor a cash adjustment in respect of such fractional interest,
rounded to the nearest one hundredth (1/100th) of a share, in an amount equal to
that fractional interest of the Liquidation Value (as shall be equitably
adjusted to reflect any stock dividend, stock distribution, stock split or
reverse stock split, combination of shares, subdivision of shares or
reclassification of shares with respect to the Series B Preferred Stock),
rounded to the nearest cent ($.01).
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(b) ALLOCATION OF DIVIDENDS. Dividends on the Series B Preferred
Stock, if paid, or if declared and set apart for payment, must be paid or
declared and set apart for payment on all outstanding shares of Series B
Preferred Stock contemporaneously. In the event dividends on the Series B
Preferred Stock and any other series of Preferred Stock ranking on a parity
therewith in respect thereto or any other class or series of capital stock of
the Corporation ranking on a parity therewith in respect thereto are declared
and paid in an amount less than all accumulated and current dividends on all of
such shares, the total amount declared and paid shall be allocated among all of
such shares so that the per share dividend to be declared and paid on each share
is the same percentage of the sum of the accumulated dividends for each such
share. In the event dividends are declared and paid on the Series B Preferred
Stock in a combination of cash and shares of Series B Preferred Stock, the
percentage of the dividend paid in cash and the percentage of the dividend paid
in stock must be the same for each share of Series B Preferred Stock.
(c) DIVIDENDS ON CONVERSION.
(i) Immediately prior to the conversion of any shares of
Series B Preferred Stock into Common Stock, all accrued and unpaid dividends
payable pursuant to Section 7 (whether or not declared) on such shares so
converted (prorated until the date of conversion in respect of the Accrual
Period in which such date occurs) shall be payable, at the Corporation's option
and in its sole discretion, out of funds legally available therefor (A) in cash,
(B) in shares of Series B Preferred Stock, such that the number of shares of
Series B Preferred Stock to be distributed with respect to the portion of the
dividend attributable to each Accrual Period shall have an aggregate Liquidation
Value (as shall be equitably adjusted to reflect any stock dividend, stock
distribution, stock split or reverse stock split, combination of shares,
subdivision of shares or reclassification of shares with respect to the Series B
Preferred Stock) at the time of such payment equal to the amount of the dividend
to be paid, or (C) in any combination of cash and shares of Series B Preferred
Stock that the Corporation may determine in its sole discretion, with the number
of shares of Common Stock to be distributed in connection therewith to be
calculated on the basis set forth in Section 7(c)(i)(B).
(ii) No fractional shares of Series B Preferred Stock or scrip
shall be issued upon payment of any dividends in shares of Series B Preferred
Stock upon conversion of any shares of Series B Preferred Stock. If more than
one share of Series B Preferred Stock shall be surrendered for conversion at any
one time by the same holder, or shall be held by the same holder at the time of
any automatic conversion, the number of full shares of Series B Preferred Stock
issuable upon payment of such dividends shall be computed on the basis of the
aggregate dividend amount that the Corporation has determined to pay in Series B
Preferred Stock shares. Instead of any fractional shares of Series B Preferred
Stock which would otherwise be issuable upon payment of such dividends, the
Corporation shall pay out of funds legally available therefor a cash adjustment
in respect of such fractional interest, rounded to the nearest one hundredth
(1/100th) of a share, in an amount equal to that fractional interest of the
Liquidation Value (as shall be equitably adjusted to reflect any stock dividend,
stock distribution, stock split or reverse stock split, combination of shares,
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subdivision of shares or reclassification of shares with respect to the Series B
Preferred Stock), rounded to the nearest cent ($.01).
8. REACQUIRED SHARES. Any shares of Series B Preferred Stock redeemed,
purchased, converted or otherwise acquired by the Corporation in any manner
whatsoever shall not be reissued as part of such series and shall be retired
promptly after the acquisition thereof. All such shares shall upon their
retirement and the filing of any certificate required in connection therewith
pursuant to the Delaware General Corporation Law become authorized but unissued
shares of Preferred Stock.
SECOND: That said determination of the powers, designation, preferences
and the relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, relating to said series of
Preferred Stock, was duly made by the Board of Directors of the Corporation
pursuant to the provisions of the Restated Certificate of Incorporation of the
Corporation, as amended, and in accordance with the provisions of Section 151 of
the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, said Corporation has caused this Certificate to be
signed by Paul M. Frison, its President, on this 13th day of November, 1996.
LIFECELL CORPORATION
By /s/ PAUL. M. FRISON
Paul M. Frison, President
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EXHIBIT 99.1
LIFECELL NEWS RELEASE
CORPORATION
For Release: IMMEDIATELY
Contact: Paul M. Frison
President
or
Jane Lea Hicks
Vice President
(713) 367-5368
LIFECELL COMPLETES $12.4 MILLION PRIVATE PLACEMENT
----------------------------------------
FUNDS TO ACCELERATE MARKETING ACTIVITIES FOR ALLODERM(R) TISSUE
THE WOODLANDS, Texas (November 19, 1996) -- LifeCell Corporation (Nasdaq:LIFC)
today announced that it has completed the previously announced private placement
of $12.4 million of convertible preferred stock and common stock purchase
warrants. Proceeds from the financing will be used primarily to accelerate and
expand the marketing activities for the Company's patented AlloDerm(R) preserved
human dermis products.
Lead investors were Vector Fund Management, L.P. and C.I.B.C. Wood Gundy
Capital. Vector Fund Management is the asset management affiliate of Vector
Securities International, a firm exclusively focused on life sciences companies.
C.I.B.C. Wood Gundy Capital is a private equity investment arm of the Canadian
Imperial Bank of Commerce. Gruntal & Co., Incorporated served as the Company's
placement agent for the financing.
"We are very pleased to have Vector Fund Management and C.I.B.C. Wood
Gundy Capital as major stockholders in LifeCell," stated Paul Frison, LifeCell's
president and chief executive officer. "Their investment will allow us to
accelerate and expand our sales and marketing programs for AlloDerm grafts in
the periodontal and burn markets and for certain plastic and reconstructive
surgery procedures."
The marketing program for AlloDerm grafts used in periodontal (gum)
surgery was recently launched through an exclusive distribution agreement with
DENTSPLY International (Nasdaq:XRAY). In addition, LifeCell began marketing
AlloDerm tissue grafts to plastic and
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LIFC Completes Private Placement
Page 2
November 19, 1996
reconstructive surgeons in 1996 through a network of regional specialty
distributors. LifeCell also markets AlloDerm directly to burn centers throughout
the United States.
LifeCell Corporation develops and commercializes tissue grafts and blood
cell preservation products. LifeCell's first commercial product, AlloDerm dermal
tissue graft, is used in periodontal surgery, for certain plastic and
reconstructive surgery procedures, and the treatment of burns. In addition to
AlloDerm grafts, the Company's current tissue graft development programs include
XenoDerm(TM) porcine dermal graft, the LifeCell(R) heart valve (through a
corporate partnership with Medtronic, Inc. [NYSE:MDT]) and universal vascular
conduits. LifeCell's product development programs also include ThromboSol(TM), a
formulation for extending the shelf-life of transfusable platelets.
CERTAIN OF THE STATEMENTS CONTAINED IN THIS NEWS RELEASE ARE
FORWARD-LOOKING STATEMENTS. WHILE THESE STATEMENTS REFLECT THE COMPANY'S CURRENT
BELIEFS, THEY ARE SUBJECT TO UNCERTAINTIES AND RISKS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THE
DEMAND FOR THE COMPANY'S PRODUCTS AND SERVICES, ECONOMIC AND COMPETITIVE
CONDITIONS, ACCESS TO BORROWED OR EQUITY CAPITAL ON FAVORABLE TERMS, AND OTHER
RISKS DETAILED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD
ENDED SEPTEMBER 30, 1996, AND ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995.
FOR ADDITIONAL INFORMATION ABOUT THE COMPANY, VISIT LIFECELL'S WEB SITE:
http://www.lifecell.com
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