<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-19890
LIFECELL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0172936
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION IDENTIFICATION NO.)
3606 RESEARCH FOREST DRIVE
THE WOODLANDS, TEXAS 77381
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(281) 367-5368
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
AS OF JULY 31, 1998, THERE WERE OUTSTANDING 11,242,244 SHARES OF COMMON
STOCK, PAR VALUE $.001, AND 120,908 OF SERIES B PREFERRED STOCK, PAR VALUE
$.001 (WHICH ARE CONVERTIBLE INTO APPROXIMATELY AN ADDITIONAL 3,900,258 SHARES
OF COMMON STOCK), OF THE REGISTRANT.
<PAGE> 2
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
LIFECELL CORPORATION
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
(UNAUDITED)
ASSETS
<C> <C>
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $12,218,679 $20,781,026
SHORT-TERM INVESTMENTS 4,001,335 -
ACCOUNTS AND OTHER RECEIVABLES, NET 1,687,620 1,095,904
INVENTORIES 1,147,471 936,398
PREPAYMENTS AND OTHER 51,068 98,226
------------- -------------
TOTAL CURRENT ASSETS 19,106,173 22,911,554
FURNITURE AND EQUIPMENT, NET 1,132,046 864,058
INTANGIBLE ASSETS, NET 248,032 379,986
------------- -------------
$20,486,251 $24,155,598
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE $452,591 $780,393
ACCRUED LIABILITIES 1,409,087 1,556,083
DEFERRED REVENUES 20,649 59,519
------------- -------------
TOTAL CURRENT LIABILITIES 1,882,327 2,395,995
DEFERRED CREDIT 1,500,000 1,500,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
SERIES B PREFERRED STOCK, $.001 PAR VALUE,
182,205 SHARES AUTHORIZED, 120,908 AND
125,441 ISSUED AND OUTSTANDING,
RESPECTIVELY 121 125
UNDESIGNATED PREFERRED STOCK, $.001 PAR VALUE,
1,817,795 SHARES AUTHORIZED, NONE ISSUED
AND OUTSTANDING - -
COMMON STOCK, $.001 PAR VALUE, 48,000,000
SHARES AUTHORIZED, 11,241,244 AND
11,012,906 SHARES ISSUED AND OUTSTANDING,
RESPECTIVELY 11,241 11,013
WARRANTS OUTSTANDING TO PURCHASE 3,182,188 AND
3,163,478 SHARES OF COMMON STOCK,
RESPECTIVELY 298,344 299,480
ADDITIONAL PAID-IN CAPITAL 56,898,783 56,360,465
ACCUMULATED DEFICIT (40,104,565) (36,411,480)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 17,103,924 20,259,603
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $20,486,251 $24,155,598
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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</TABLE>
<TABLE>
<CAPTION>
LIFECELL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
------------------------------
1998 1997
------------- -------------
<C> <C>
REVENUES
PRODUCT SALES $2,003,324 $1,007,464
RESEARCH FUNDED BY OTHERS 168,635 265,548
------------- -------------
TOTAL REVENUES 2,171,959 1,273,012
------------- -------------
COSTS AND EXPENSES
COST OF GOODS SOLD 704,931 520,551
RESEARCH AND DEVELOPMENT 879,861 546,962
GENERAL AND ADMINISTRATIVE 749,730 693,501
SELLING AND MARKETING 1,591,472 1,190,745
------------- -------------
TOTAL COSTS AND EXPENSES 3,925,994 2,951,759
------------- -------------
LOSS FROM OPERATIONS (1,754,035) (1,678,747)
------------- -------------
INTEREST INCOME AND OTHER, NET 224,261 105,772
------------- -------------
NET LOSS $(1,529,774) $(1,572,975)
============= =============
LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.15) $(0.25)
============= =============
SHARES USED IN COMPUTING
LOSS PER COMMON SHARE - BASIC AND DILUTED 11,182,112 6,888,787
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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</TABLE>
<TABLE>
<CAPTION>
LIFECELL CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
------------------------------
1998 1997
------------- -------------
<C> <C>
REVENUES
PRODUCT SALES $3,818,438 $1,828,433
RESEARCH FUNDED BY OTHERS 310,984 555,224
------------- -------------
TOTAL REVENUES 4,129,422 2,383,657
------------- -------------
COSTS AND EXPENSES
COST OF GOODS SOLD 1,547,213 1,010,191
RESEARCH AND DEVELOPMENT 1,625,761 1,115,067
GENERAL AND ADMINISTRATIVE 1,760,296 1,490,872
SELLING AND MARKETING 3,007,418 2,226,649
------------- -------------
TOTAL COSTS AND EXPENSES 7,940,688 5,842,779
------------- -------------
LOSS FROM OPERATIONS (3,811,266) (3,459,122)
------------- -------------
INTEREST INCOME AND OTHER, NET 479,102 236,510
------------- -------------
NET LOSS $(3,332,164) $(3,222,612)
============= =============
LOSS PER COMMON SHARE - BASIC AND DILUTED $(0.33) $(0.64)
============= =============
SHARES USED IN COMPUTING
LOSS PER COMMON SHARE - BASIC AND DILUTED 11,160,771 5,980,521
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
PAGE 4
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LIFECELL CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
------------------------------
1998 1997
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS $ (3,332,164) $ (3,222,612)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES-
DEPRECIATION AND AMORTIZATION 150,258 93,430
CHANGE IN ASSETS AND LIABILITIES-
(INCREASE) DECREASE IN ACCOUNTS AND
OTHER RECEIVABLES (591,716) (365,424)
(INCREASE) DECREASE IN INVENTORIES (211,072) (153,503)
(INCREASE) DECREASE IN PREPAYMENTS
AND OTHER 224,682 (20,064)
INCREASE (DECREASE) IN ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES (474,799) 396,889
INCREASE (DECREASE) IN DEFERRED
REVENUES AND DEFERRED CREDIT (38,870) 76,482
------------- -------------
TOTAL ADJUSTMENTS (941,517) 27,810
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (4,273,681) (3,194,802)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
CAPITAL EXPENDITURES (411,015) (379,392)
INTANGIBLE ASSETS (52,803) (48,125)
SHORT-TERM INVESTMENTS (4,001,335) -
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (4,465,153) (427,517)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM ISSUANCE OF STOCK AND
WARRANTS 537,407 207,294
PROCEEDS FROM ISSUANCE OF NOTES PAYABLE - 65,369
CASH DIVIDENDS PAID (360,920) (76,823)
PAYMENTS OF NOTES PAYABLE - (31,375)
------------- -------------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES 176,487 164,465
------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (8,562,347) (3,457,854)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 20,781,026 10,748,250
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 12,218,679 $ 7,290,396
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
CASH PAID DURING THE PERIOD FOR INTEREST $ - $ 1,860
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
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CONDENSED NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND CERTAIN SIGNIFICANT RISKS:
LIFECELL CORPORATION, A DELAWARE CORPORATION, ("LIFECELL" OR
THE "COMPANY") IS A BIOENGINEERING COMPANY ENGAGED IN THE DEVELOPMENT AND
COMMERCIALIZATION OF TISSUE REGENERATION AND CELL
PRESERVATION PRODUCTS. THE COMPANY WAS INCORPORATED ON JANUARY 6, 1992,
FOR THE PURPOSE OF MERGING WITH ITS
PREDECESSOR ENTITY, WHICH WAS FORMED IN 1986. LIFECELL BEGAN COMMERCIAL SALES
OF ITS FIRST TRANSPLANTABLE TISSUE PRODUCT,
ALLODERM (R) ACELLULAR DERMAL GRAFT, DURING 1994. THE FUTURE OPERATING RESULTS
OF THE COMPANY WILL BE PRINCIPALLY DEPENDENT ON
THE MARKET ACCEPTANCE OF ITS CURRENT AND FUTURE PRODUCTS,COMPETITION
FROM OTHER PRODUCTS OR TECHNOLOGIES, PROTECTION OF
THE COMPANY'S PROPRIETARY TECHNOLOGY, AND ACCESS TO FUNDING AS REQUIRED.
ACCORDINGLY, THERE CAN BE NO ASSURANCE OF THE
COMPANY'S FUTURE SUCCESS. SEE "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS"
ELSEWHERE HEREIN AND "RISK FACTORS" IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K/A, AS AMENDED FOR THE YEAR ENDED
DECEMBER 31, 1997.
2. BASIS OF PRESENTATION
THE ACCOMPANYING UNAUDITED FINANCIAL STATEMENTS HAVE BEEN PREPARED PURSUANT TO
THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"). CERTAIN INFORMATION AND FOOTNOTE DISCLOSURES NORMALLY INCLUDED
IN THE ANNUAL FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES HAVE BEEN CONDENSED OR OMITTED PURSUANT TO THOSE
RULES AND REGULATIONS. THIS FINANCIAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS INCLUDED WITHIN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K/A, AS AMENDED FOR THE YEAR ENDED DECEMBER 31, 1997.
IN THE OPINION OF THE MANAGEMENT OF THE COMPANY, THE ACCOMPANYING FINANCIAL
STATEMENTS REFLECT ALL ADJUSTMENTS (CONSISTING ONLY OF NORMAL RECURRING
ADJUSTMENTS) THAT ARE NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL POSITION
AND THE RESULTS OF OPERATIONS FOR THE PERIODS PRESENTED. FINANCIAL RESULTS
FOR INTERIM PERIODS ARE NOT NECESSARILY INDICATIVE OF THE RESULTS FOR THE FULL
YEAR OR FUTURE INTERIM PERIODS.
3. INVENTORIES
INVENTORIES CONSIST OF PRODUCTS IN VARIOUS STAGES PRODUCED FOR SALE AND
INCLUDE THE COSTS OF RAW MATERIALS, LABOR AND OVERHEAD. A SUMMARY OF
INVENTORIES IS AS FOLLOWS:
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------- -------------
<C> <C>
RAW MATERIALS USED IN PRODUCTION $520,497 $428,406
WORK-IN-PROCESS 258,762 228,071
FINISHED GOODS 368,212 279,921
------------- -------------
TOTAL INVENTORIES $1,147,471 $936,398
============= =============
4. DIVIDENDS PAYABLE ON SERIES B PREFERRED STOCK
THE SERIES B PREFERRED STOCK BEARS CUMULATIVE DIVIDENDS, PAYABLE QUARTERLY FOR
FIVE YEARS ENDING 2001, AT THE ANNUAL RATE OF $6.00 PER SHARE. DIVIDENDS MAY
BE PAID IN CASH, IN ADDITIONAL SHARES OF SERIES B PREFERRED STOCK BASED ON THE
STATED VALUE OF $100 PER SHARE, OR ANY COMBINATION OF CASH AND SERIES B
PREFERRED STOCK AT THE COMPANY'S OPTION.
WHILE THE SHARES OF SERIES B PREFERRED STOCK ARE OUTSTANDING OR ANY DIVIDENDS
ARE OWED THEREON, THE COMPANY MAY NOT DECLARE OR PAY CASH DIVIDENDS ON ITS
PAGE 6
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COMMON STOCK.
DURING THE SECOND QUARTER OF 1998, THE COMPANY ACCRUED DIVIDENDS ON THE SERIES
B PREFERRED STOCK OF $181,056, PAYABLE IN CASH. SUCH DIVIDEND IS PAYABLE ON
AUGUST 15, 1998.
DURING THE FIRST SIX MONTHS OF 1998, THE COMPANY ACCRUED DIVIDENDS ON THE SERIES
B PREFERRED STOCK OF $360,921, OF WHICH $179,865 WAS PAID IN CASH ON MAY 15,
1998.
5. LOSS PER SHARE
LOSS PER COMMON SHARE HAS BEEN COMPUTED BY DIVIDING NET LOSS, WHICH HAS BEEN
INCREASED FOR IMPUTED AND STATED DIVIDENDS ON OUTSTANDING PREFERRED STOCK, BY
THE WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING DURING EACH
PERIOD. IN ALL APPLICABLE YEARS, ALL COMMON STOCK EQUIVALENTS, INCLUDING THE
SERIES B PREFERRED STOCK, WERE ANTIDILUTIVE AND, ACCORDINGLY, WERE NOT
INCLUDED IN THE COMPUTATION.
DURING 1997, THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 128, "EARNINGS PER SHARE," AND ALL PRIOR PERIODS HAVE BEEN RETROACTIVELY
ADJUSTED TO CONFORM TO THIS STATEMENT. THE IMPLEMENTATION OF STATEMENT 128
HAD NO EFFECT ON THE COMPANY'S PRESENTATION OF EARNINGS PER SHARE DUE TO THE
ANTIDILUTIVE NATURE OF ALL OF THE COMPANY'S COMMON STOCK EQUIVALENTS.
BASIC LOSS PER COMMON SHARE WAS CALCULATED AS FOLLOWS:
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------- ------------- -------------
<C> <C> <C> <C>
NET LOSS $ (1,529,774) $ (1,572,975) $(3,332,164) $ (3,222,612)
LESS: PREFERRED DIVIDENDS (181,056) (182,492) (360,921) (595,088)
------------- ------------- ------------- -------------
NET LOSS AVAILABLE TO COMMON
STOCK-BASIC $ (1,710,830) $ (1,755,467) $(3,693,085) $ (3,817,700)
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING-
BASIC 11,182,112 6,888,787 11,160,771 5,980,521
============= ============= ============= =============
LOSS PER COMMON SHARE-BASIC $ (0.15) $ (0.25) $ (0.33) $ (0.64)
============= ============= ============= =============
DILUTED LOSS PER COMMON SHARE IS THE SAME AS BASIC LOSS PER SHARE DUE TO THE
ANTIDILUTIVE NATURE OF ALL OF THE COMPANY'S COMMON STOCK EQUIVALENTS.
6. COMMITMENTS AND CONTINGENCIES
THE COMPANY IS SUBJECT TO NUMEROUS RISKS AND UNCERTAINTIES AND FROM TIME TO
TIME MAY BE SUBJECT TO VARIOUS CLAIMS IN THE ORDINARY COURSE OF ITS
OPERATIONS. THE COMPANY MAINTAINS INSURANCE COVERAGE FOR EVENTS AND IN
AMOUNTS THAT IT DEEMS APPROPRIATE. THERE CAN BE NO ASSURANCE THAT THE LEVEL
OF INSURANCE MAINTAINED WILL BE SUFFICIENT TO COVER ANY CLAIMS INCURRED BY THE
COMPANY OR THAT THE TYPE OF CLAIMS WILL BE COVERED BY THE TERMS OF INSURANCE
COVERAGE.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION OF OPERATIONS AND FINANCIAL CONDITION OF LIFECELL
SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND NOTES HEREIN.
CERTAIN STATEMENTS SET FORTH BELOW CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE
"SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS."
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GENERAL AND BACKGROUND
LIFECELL IS A BIOENGINEERING COMPANY ENGAGED IN THE DEVELOPMENT AND
COMMERCIALIZATION OF TISSUE REGENERATION AND CELL PRESERVATION PRODUCTS. THE
COMPANY'S PATENTED TISSUE PROCESSING AND CELL PRESERVATION TECHNOLOGIES SERVE
AS PLATFORMS FOR A BROAD RANGE OF POTENTIAL PRODUCTS ADDRESSING SIGNIFICANT
CLINICAL NEEDS IN MULTIPLE MARKETS. THE COMPANY'S FIRST COMMERCIAL PRODUCT IS
ALLODERM, A TISSUE GRAFT CONSISTING OF AN EXTRACELLULAR TISSUE MATRIX THAT
RETAINS THE ESSENTIAL BIOCHEMICAL AND STRUCTURAL COMPOSITION OF HUMAN DERMIS.
THE COMPANY BELIEVES THAT ALLODERM IS THE ONLY COMMERCIAL TISSUE TRANSPLANT
PRODUCT THAT PROMOTES NORMAL HUMAN SOFT TISSUE REGENERATION. THE COMPANY
CURRENTLY MARKETS ALLODERM IN THE UNITED STATES AND INTERNATIONALLY FOR USE
IN RECONSTRUCTIVE PLASTIC, DENTAL AND BURN SURGERY AND IT HAS BEEN SUCCESSFULLY
TRANSPLANTED IN APPROXIMATELY 25,000 PATIENTS. LIFECELL'S DEVELOPMENT PROGRAMS
INCLUDE MICRONIZED ALLODERM (tm) , HEART VALVES, VASCULAR GRAFTS, NERVE
CONNECTIVE TISSUE AND THROMBOSOL (tm) PLATELET STORAGE SOLUTION.
SINCE INCEPTION, LIFECELL'S ACTIVITIES HAVE BEEN FINANCED THROUGH THE PUBLIC AND
PRIVATE SALE OF EQUITY SECURITIES, THROUGH PRODUCT SALES, THROUGH A CORPORATE
ALLIANCE WITH MEDTRONIC, INC. AND THROUGH THE RECEIPT OF GOVERNMENT GRANTS AND
CONTRACTS.
LIFECELL BEGAN THE SALE OF ALLODERM GRAFTS AS A DERMAL REPLACEMENT IN THE
GRAFTING OF THIRD-DEGREE BURNS IN DECEMBER 1993 AND COMMENCED COMMERCIAL
ACTIVITIES IN 1994. LIFECELL COMMENCED THE SALE OF ALLODERM FOR PERIODONTAL
SURGERY IN SEPTEMBER 1995 AND FOR RECONSTRUCTIVE PLASTIC SURGERY USES IN
NOVEMBER 1995. TO DATE, PROCEEDS FROM THE SALE OF ALLODERM PRODUCTS HAVE NOT
BEEN SUFFICIENT TO FUND IN FULL THE COMPANY'S OPERATING ACTIVITIES.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
THE NET LOSS FOR THE THREE MONTHS ENDED JUNE 30, 1998, DECREASED 3% TO
APPROXIMATELY $1.5 MILLION COMPARED TO APPROXIMATELY $1.6 MILLION FOR THE SAME
PERIOD OF 1997. THE DECREASE WAS PRINCIPALLY ATTRIBUTABLE TO INCREASED INCOME
FROM INVESTMENTS AS WELL AS INCREASED REVENUES FROM PRODUCT SALES. THESE
INCREASED REVENUES WERE OFFSET BY HIGHER COSTS ASSOCIATED WITH THE COMPANY'S
INCREASED MARKETING ACTIVITIES FOR ITS ALLODERM PRODUCTS, INCREASED INVESTMENT
IN THE COMPANY'S PRODUCT DEVELOPMENT PROGRAMS AS WELL AS INCREASED EXPENDITURES
FOR THE INFRASTRUCTURE TO SUPPORT THESE ACTIVITIES.
TOTAL REVENUES FOR THE THREE MONTHS ENDED JUNE 30, 1998, INCREASED 71% TO
APPROXIMATELY $2.2 MILLION COMPARED TO APPROXIMATELY $1.3 MILLION FOR THE SAME
PERIOD OF 1997. APPROXIMATELY $1.0 MILLION OF SUCH INCREASE WAS ATTRIBUTABLE TO
INCREASED SALES OF PRODUCTS, WHICH WERE THE RESULT OF EXPANDED SALES AND
MARKETING ACTIVITIES AND INCREASED DISTRIBUTION ACTIVITIES DURING THE 1998
PERIOD. THIS INCREASE WAS OFFSET IN PART BY AN APPROXIMATELY $97,000 DECREASE
IN REVENUES FROM FUNDED RESEARCH AND DEVELOPMENT. THE RESEARCH AND DEVELOPMENT
FUNDING AVAILABLE TO THE COMPANY THROUGH GRANTS AND ALLIANCES WAS LOWER DURING
THE THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO THE SAME PERIOD OF 1997.
AMOUNTS RECOGNIZED AS REVENUES UNDER SUCH COST-REIMBURSEMENT ARRANGEMENTS ARE
FOR EXPENSES INCURRED DURING THE PERIODS.
COST OF GOODS SOLD FOR THE THREE MONTHS ENDED JUNE 30, 1998 WAS APPROXIMATELY
$705,000 RESULTING IN A GROSS MARGIN OF APPROXIMATELY 65%. THE GROSS MARGIN
FOR THE SAME PERIOD OF 1997 WAS APPROXIMATELY 48%. THE INCREASE IN GROSS
MARGIN WAS PRINCIPALLY ATTRIBUTABLE TO THE IMPLEMENTATION OF CERTAIN PRODUCTION
EFFICIENCIES AND THE ALLOCATION OF FIXED COSTS TO HIGHER VOLUMES OF PRODUCTS
PRODUCED IN 1998, AS WELL AS INCREASES IN SALES OF CERTAIN HIGHER MARGIN
ALLODERM PRODUCTS AND PRICES OF CERTAIN ALLODERM PRODUCTS.
PAGE 8
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RESEARCH AND DEVELOPMENT EXPENSES FOR THE THREE MONTHS ENDED JUNE 30, 1998,
INCREASED 61% TO APPROXIMATELY $880,000 COMPARED TO APPROXIMATELY $547,000 FOR
THE COMPARABLE PERIOD IN 1997. THE INCREASE IN RESEARCH AND DEVELOPMENT
EXPENSE WAS PRIMARILY ATTRIBUTABLE TO THE INCREASED ANIMAL AND CLINICAL STUDIES
TO EXPAND THE USES OF ALLODERM. IN ADDITION, THE COMPANY HAS DEDICATED
INCREASED RESOURCES TO PRODUCT DEVELOPMENT PROGRAMS SUCH AS MICRONIZED ALLODERM
(ALLODERM REDUCED TO THE SIZE NECESSARY FOR NEEDLE INJECTION).
GENERAL AND ADMINISTRATIVE EXPENSES DURING THE THREE MONTHS ENDED JUNE 30,
1998, INCREASED 8% TO APPROXIMATELY $750,000 COMPARED TO APPROXIMATELY
$694,000 FOR THE SAME PERIOD OF 1997. THE INCREASE WAS PRINCIPALLY
ATTRIBUTABLE TO SEVERAL FACTORS, INCLUDING THE FEE PAID DURING THE CURRENT
QUARTER TO NASDAQ IN CONNECTION WITH THE LISTING OF THE COMPANY'S COMMON STOCK
ON THE NASDAQ NATIONAL MARKET SYSTEM.
SELLING AND MARKETING EXPENSES INCREASED 34% TO APPROXIMATELY $1.6 MILLION
DURING THE THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO APPROXIMATELY $1.2
MILLION FOR THE SAME PERIOD OF 1997. THE INCREASE WAS PRIMARILY ATTRIBUTABLE
TO THE ADDITION OF DOMESTIC SALES AND MARKETING PERSONNEL AS WELL AS INCREASED
INTERNATIONAL MARKETING COSTS RELATED TO ALLODERM.
INTEREST INCOME AND OTHER, NET INCREASED 112% TO APPROXIMATELY $224,000 DURING
THE THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO APPROXIMATELY $106,000 FOR
THE SAME PERIOD OF 1997. THE INCREASE WAS PRINCIPALLY ATTRIBUTABLE TO HIGHER
FUNDS AVAILABLE FOR INVESTMENT DURING THE CURRENT PERIOD AS A RESULT OF THE
APPROXIMATELY $16.0 MILLION NET PROCEEDS RECEIVED FROM THE COMPANY'S DECEMBER
1997, PUBLIC OFFERING OF SHARES OF COMMON STOCK.
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
THE NET LOSS FOR THE SIX MONTHS ENDED JUNE 30, 1998, INCREASED 3% TO
APPROXIMATELY $3.3 MILLION COMPARED TO APPROXIMATELY $3.2 MILLION FOR THE SAME
PERIOD OF 1997. THE INCREASE WAS PRINCIPALLY ATTRIBUTABLE TO HIGHER COSTS
ASSOCIATED WITH THE COMPANY'S INCREASED MARKETING ACTIVITIES FOR ITS ALLODERM
PRODUCTS, INCREASED INVESTMENT IN THE COMPANY'S PRODUCT DEVELOPMENT PROGRAMS AS
WELL AS INCREASED EXPENDITURES FOR THE INFRASTRUCTURE TO SUPPORT THESE
ACTIVITIES. THE INCREASE IN NET LOSS WAS OFFSET PARTIALLY BY INCREASED PRODUCT
SALES, AS WELL AS, HIGHER INTEREST INCOME FROM INVESTMENTS.
TOTAL REVENUES FOR THE SIX MONTHS ENDED JUNE 30, 1998, INCREASED 73% TO
APPROXIMATELY $4.1 MILLION COMPARED TO APPROXIMATELY $2.4 MILLION FOR THE SAME
PERIOD OF 1997. APPROXIMATELY $2.0 MILLION OF SUCH INCREASE WAS ATTRIBUTABLE TO
INCREASED SALES OF PRODUCTS, WHICH WERE THE RESULT OF EXPANDED SALES AND
MARKETING ACTIVITIES AND INCREASED DISTRIBUTION ACTIVITIES DURING THE 1998
PERIOD. THIS INCREASE WAS OFFSET IN PART BY AN APPROXIMATELY $244,000 DECREASE
IN REVENUES FROM FUNDED RESEARCH AND DEVELOPMENT. THE RESEARCH AND DEVELOPMENT
FUNDING AVAILABLE TO THE COMPANY THROUGH GRANTS AND ALLIANCES WAS LOWER DURING
THE SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE SAME PERIOD OF 1997. AMOUNTS
RECOGNIZED AS REVENUES UNDER SUCH COST-REIMBURSEMENT ARRANGEMENTS ARE FOR
EXPENSES INCURRED DURING THE PERIODS.
COST OF GOODS SOLD FOR THE SIX MONTHS ENDED JUNE 30, 1998 WAS APPROXIMATELY
$1.5 MILLION RESULTING IN A GROSS MARGIN OF APPROXIMATELY 59%. THE GROSS MARGIN
FOR THE SAME PERIOD OF 1997 WAS APPROXIMATELY 45%. THE INCREASE IN GROSS
MARGIN WAS PRINCIPALLY ATTRIBUTABLE TO THE IMPLEMENTATION OF CERTAIN PRODUCTION
EFFICIENCIES AND THE ALLOCATION OF FIXED COSTS TO HIGHER VOLUMES OF PRODUCTS
PRODUCED IN 1998, AS WELL AS AN INCREASE IN SALES OF CERTAIN HIGHER MARGIN
ALLODERM PRODUCTS AND PRICES OF CERTAIN ALLODERM PRODUCTS.
PAGE 9
<PAGE> 10
RESEARCH AND DEVELOPMENT EXPENSES FOR THE SIX MONTHS ENDED JUNE 30, 1998,
INCREASED 46% TO APPROXIMATELY $1.6 MILLION COMPARED TO APPROXIMATELY $1.1
MILLION FOR THE COMPARABLE PERIOD IN 1997. THE INCREASE IN RESEARCH AND
DEVELOPMENT EXPENSE WAS PRIMARILY ATTRIBUTABLE TO THE INCREASED ANIMAL AND
CLINICAL STUDIES FOR THE EXPANDING USES OF ALLODERM. IN ADDITION, THE COMPANY
HAS DEDICATED INCREASED RESOURCES TO PRODUCT DEVELOPMENT PROGRAMS SUCH AS
MICRONIZED ALLODERM (ALLODERM REDUCED TO THE SIZE NECESSARY FOR NEEDLE
INJECTION).
GENERAL AND ADMINISTRATIVE EXPENSES DURING THE SIX MONTHS ENDED JUNE 30,
1998 INCREASED 18% TO APPROXIMATELY $1.8 MILLION COMPARED TO APPROXIMATELY $1.5
MILLION FOR THE SAME PERIOD OF 1997. THE INCREASE WAS ATTRIBUTABLE TO VARIOUS
FACTORS, INCLUDING THE FEE PAID DURING THE CURRENT QUARTER TO NASDAQ IN
CONNECTION WITH THE LISTING OF THE COMPANY'S COMMON STOCK ON THE NASDAQ NATIONAL
MARKET SYSTEM. IN ADDITION THE INCREASE IS RELATED TO A REDUCTION IN THE VALUE
OF CERTAIN INTANGIBLE ASSETS RECORDED IN THE FIRST QUARTER OF 1998 AND THE COSTS
ASSOCIATED WITH RETAINING A FINANCIAL ADVISOR FOR THE COMPANY'S BUSINESS
DEVELOPMENT ACTIVITIES.
SELLING AND MARKETING EXPENSES INCREASED 35% TO APPROXIMATELY $3.0 MILLION
DURING THE SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO APPROXIMATELY $2.2 MILLION
FOR THE SAME PERIOD OF 1997. THE INCREASE WAS PRIMARILY ATTRIBUTABLE TO THE
ADDITION OF DOMESTIC SALES AND MARKETING PERSONNEL AS WELL AS INCREASED
INTERNATIONAL MARKETING COSTS RELATED TO ALLODERM.
INTEREST INCOME AND OTHER, NET INCREASED 103% TO APPROXIMATELY $479,000 DURING
THE SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO APPROXIMATELY $237,000 FOR THE
AME PERIOD OF 1997. THE INCREASE WAS PRINCIPALLY ATTRIBUTABLE TO HIGHER FUNDS
VAILABLE FOR INVESTMENT DURING THE CURRENT PERIOD AS A RESULT OF THE
APPROXIMATELY $16.0 MILIION NET PROCEEDS RECEIVED FROM THE COMPANY'S DECEMBER
1997, PUBLIC OFFERING OF SHARES OF COMMON STOCK.
LIQUIDITY AND CAPITAL RESOURCES
SINCE ITS INCEPTION, LIFECELL'S PRINCIPAL SOURCES OF FUNDS HAVE BEEN EQUITY
OFFERINGS, PRODUCT SALES, EXTERNAL FUNDING OF RESEARCH ACTIVITIES, AND INTEREST ON INVESTMENTS.
LIFECELL EXPECTS TO INCUR SUBSTANTIAL EXPENSES IN CONNECTION WITH ITS EFFORTS TO
EXPAND SALES AND MARKETING OF ALLODERM, DEVELOP EXPANDED USES FOR ALLODERM,
CONDUCT THE COMPANY'S PRODUCT DEVELOPMENT PROGRAMS (INCLUDING COSTS OF CLINICAL
STUDIES), PREPARE AND MAKE ANY REQUIRED REGULATORY FILINGS, INTRODUCE PRODUCTS,
PARTICIPATE IN TECHNICAL SEMINARS AND SUPPORT ONGOING ADMINISTRATIVE AND
RESEARCH AND DEVELOPMENT ACTIVITIES. THE COMPANY CURRENTLY INTENDS TO FUND
THESE ACTIVITIES FROM ITS EXISTING CASH RESOURCES, SALES OF PRODUCTS AND
RESEARCH AND DEVELOPMENT FUNDING RECEIVED FROM OTHERS. WHILE THE COMPANY
BELIEVES THAT ITS EXISTING AVAILABLE FUNDS WILL BE SUFFICIENT TO MEET ITS
PRESENT OPERATING AND CAPITAL REQUIREMENTS THROUGH AT LEAST 1999, THERE CAN BE
NO ASSURANCE THAT SUCH SOURCES OF FUNDS WILL BE SUFFICIENT TO MEET THESE FUTURE
EXPENSES. IF ADEQUATE FUNDS ARE NOT AVAILABLE, THE COMPANY EXPECTS IT WILL BE
REQUIRED TO DELAY, SCALE BACK OR ELIMINATE ONE OR MORE OF ITS PRODUCT
DEVELOPMENT PROGRAMS. THE COMPANY'S NEED FOR ADDITIONAL FINANCING WILL BE
PRINCIPALLY DEPENDENT ON THE DEGREE OF MARKET ACCEPTANCE ACHIEVED BY THE
COMPANY'S PRODUCTS AND THE EXTENT TO WHICH THE COMPANY CAN ACHIEVE SUBSTANTIAL
GROWTH IN PRODUCT SALES DURING 1998 AND 1999, AS WELL AS THE EXTENT TO WHICH THE
COMPANY MAY DECIDE TO EXPAND ITS PRODUCT DEVELOPMENT EFFORTS. THERE CAN BE NO
ASSURANCE THAT THE COMPANY WILL BE ABLE TO OBTAIN ANY SUCH ADDITIONAL FINANCING
ON ACCEPTABLE TERMS, IF AT ALL.
PAGE 10
<PAGE> 11
DURING JUNE 1998, LIFECELL RECEIVED PROCEEDS OF $500,000 RELATED TO THE SALE OF
THE COMPANY'S COMMON STOCK TO AN UNAFFILIATED PARTY IN CONNECTION WITH THE
SETTLEMENT OF PRIOR LITIGATION. THE PURCHASE PRICE, AS DETERMINED BY THE
SETTLEMENT AGREEMENT, WAS $7.62 PER SHARE.
LIFECELL HAS INCURRED LOSSES SINCE INCEPTION AND THEREFORE HAS NOT BEEN SUBJECT
TO FEDERAL INCOME TAXES. AS OF DECEMBER 31, 1997, LIFECELL HAD NET OPERATING
LOSS (NOL) AND RESEARCH AND DEVELOPMENT TAX CREDIT CARRYFORWARDS FOR INCOME TAX
PURPOSES OF APPROXIMATELY $32.1 MILLION AND $395,000, RESPECTIVELY, AVAILABLE TO
REDUCE FUTURE INCOME TAX AND TAX LIABILITIES. FEDERAL TAX LAWS PROVIDE FOR A
LIMITATION ON THE USE OF NOL AND TAX CREDIT CARRYFORWARDS FOLLOWING CERTAIN
OWNERSHIP CHANGES THAT COULD LIMIT LIFECELL'S ABILITY TO USE ITS NOL AND TAX
CREDIT CARRYFORWARDS. THE SALE OF COMMON STOCK IN A PUBLIC OFFERING IN DECEMBER
1997 RESULTED IN AN OWNERSHIP CHANGE FOR FEDERAL INCOME TAX PURPOSES. THE
COMPANY ESTIMATES THAT THE AMOUNT OF NOL CARRYFORWARDS AND THE CREDITS AVAILABLE
TO OFFSET TAXABLE INCOME SUBSEQUENT TO THE OFFERING WILL BE APPROXIMATELY $2.6
MILLION PER YEAR ON A CUMULATIVE BASIS. ACCORDINGLY, IF LIFECELL GENERATES
TAXABLE INCOME IN ANY YEAR IN EXCESS OF ITS THEN CUMULATIVE LIMITATION, THE
COMPANY MAY BE REQUIRED TO PAY FEDERAL INCOME TAXES EVEN THOUGH IT HAS UNEXPIRED
NOL AND TAX CREDIT CARRYFORWARDS.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
NONE.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
THE COMPANY FROM TIME TO TIME MAY BE SUBJECT TO VARIOUS CLAIMS IN THE ORDINARY
COURSE OF ITS OPERATIONS. THE COMPANY MAINTAINS INSURANCE COVERAGE FOR EVENTS
AND IN AMOUNTS THAT IT DEEMS APPROPRIATE.
ITEM 2. CHANGES IN SECURITIES
DURING THE THREE MONTHS ENDED JUNE 30, 1998, THE COMPANY SOLD 65,600 SHARES OF
COMMON STOCK FOR AN AGGREGATE CONSIDERATION OF $500,000 TO AN UNAFFILIATED
PARTY, PURSUANT TO THE SETTLEMENT OF PRIOR LITIGATION. THIS ISSUANCE DID NOT
INVOLVE AN UNDERWRITER. THE COMPANY CONSIDERS THESE SECURITIES TO HAVE BEEN
OFFERED AND SOLD IN TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING AND, THEREFORE,
TO BE EXEMPTED FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT OF
1933, AS AMENDED.
PAGE 11
<PAGE> 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
ON MAY 27, 1998, AT THE COMPANY'S ANNUAL MEETING OF STOCKHOLDERS, THE
INDIVIDUALS LISTED BELOW WERE ELECTED DIRECTORS BY THE HOLDERS OF COMMON STOCK
AND SERIES B PREFERRED STOCK, VOTING TOGETHER AS A CLASS. SET FORTH OPPOSITE
EACH DIRECTOR'S NAME IS THE TABULATION OF VOTES CAST.
VOTES VOTES
NAME FOR WITHHELD
---- ----- --------
MICHAEL E. CAHR 12,926,002 29,924
PAUL M. FRISON 12,912,275 43,651
JAMES G. FOSTER 12,921,877 34,049
STEPHEN A. LIVESEY 12,924,177 31,749
DAVID A. THOMPSON 12,925,877 30,049
THE ADDITIONAL INDIVIDUALS LISTED BELOW WERE ELECTED DIRECTORS BY THE HOLDERS OF
SERIES B PREFERRED STOCK, VOTING AS A SEPARATE CLASS.
VOTES VOTES
NAME FOR WITHHELD
---- ----- --------
K. FLYNN MCDONALD 110,785 --
LORI G. KOFFMAN 110,785 --
THE HOLDERS OF COMMON STOCK AND SERIES B PREFERRED STOCK, VOTING TOGETHER AS A
CLASS, APPROVED A PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
25,000,000 SHARES TO 48,000,000 SHARES.
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
12,743,339 184,357 26,880 1,350
THE HOLDERS OF COMMON STOCK AND SERIES B PREFERRED STOCK VOTING TOGETHER AS A
CLASS AND THE HOLDERS OF SERIES B PREFERRED STOCK VOTING AS A SEPARATE CLASS,
APPROVED A PROPOSAL TO AMEND THE CERTIFICATE OF DESIGNATION OF THE SERIES B
PREFERRED STOCK TO REDUCE THE NUMBER OF DIRECTORS THAT MAY BE ELECTED BY THE
HOLDERS OF SERIES B PREFERRED STOCK FROM THREE TO TWO DIRECTORS IF AT LEAST
60,000 SHARES OF SERIES B PREFERRED STOCK ARE OUTSTANDING AND TO ONE DIRECTOR IF
LESS THAN 60,000 SHARES BUT AT LEAST 10,000 SHARES OF SERIES B PREFERRED STOCK
ARE OUTSTANDING.
COMMON STOCKHOLDERS AND SERIES B PREFERRED STOCKHOLDERS TOGETHER AS A CLASS:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
9,524,454 156,865 36,179 3,238,426
SERIES B PREFERRED STOCKHOLDERS, SEPARATE AS A CLASS:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
109,106 1,449 230 10,514
THE HOLDERS OF COMMON STOCK AND SERIES B PREFERRED STOCK VOTING TOGETHER AS A
CLASS AND THE HOLDERS OF SERIES B PREFERRED STOCK VOTING AS A SEPARATE CLASS,
APPROVED A PROPOSAL TO AMEND THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION
TO DELETE CERTAIN CONDITIONS TO AUTOMATIC CONVERSION SO THAT THE SERIES B
PREFERRED STOCK SHALL AUTOMATICALLY CONVERT INTO COMMON STOCK WHEN THE MARKET
PRICE OF THE COMPANY'S COMMON STOCK AVERAGES OR EXCEEDS $9.30 PER SHARE FOR 30
CONSECUTIVE TRADING DAYS.
PAGE 12
<PAGE> 13
COMMON STOCKHOLDERS AND SERIES B PREFERRED STOCKHOLDERS TOGETHER AS A CLASS:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
9,422,584 175,990 32,500 3,324,851
SERIES B PREFERRED STOCKHOLDERS, SEPARATE AS A CLASS:
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
109,596 1,189 0 10,514
THE HOLDERS OF COMMON STOCK AND SERIES B PREFERRED STOCK, VOTING TOGETHER AS A
CLASS, APPROVED AN AMENDMENT TO THE LIFECELL CORPORATION AMENDED AND RESTATED
1992 STOCK OPTION PLAN, INCREASING THE AGGREGATE NUMBER OF SHARES OF COMMON
STOCK FOR WHICH OPTIONS MAY BE GRANTED UNDER THE PLAN FROM 1,500,000 TO
2,500,000 SHARES.
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON-VOTES
--------- ------------- --------------- ----------------
9,206,052 395,996 76,484 3,324,847
ITEM 5. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS
CERTAIN OF THE STATEMENTS CONTAINED IN THIS REPORT ARE FORWARD-LOOKING
STATEMENTS. WHILE THESE STATEMENTS REFLECT THE COMPANY'S BELIEFS AS OF THE DATE
OF THIS REPORT, THEY ARE SUBJECT TO UNCERTAINTIES AND RISKS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY. IN ADDITION, THE OPERATIONS AND ACTIVITIES
OF THE COMPANY AND INVESTMENTS IN ITS SECURITIES ARE SUBJECT TO CERTAIN
SIGNIFICANT RISKS. THESE RISKS INCLUDE, BUT ARE NOT LIMITED TO, THE DEMAND FOR
THE COMPANY'S PRODUCTS AND SERVICES, ECONOMIC AND COMPETITIVE CONDITIONS,
COMPETITIVE PRODUCTS AND TECHNOLOGIES, UNCERTAINTY OF PATENT PROTECTION, ACCESS
TO BORROWED OR EQUITY CAPITAL ON FAVORABLE TERMS, AND OTHER RISKS DETAILED IN
THE COMPANY'S ANNUAL REPORT ON FORM 10-K/A, AS AMENDED, FOR THE YEAR ENDED
DECEMBER 31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. EXHIBITS
3.1 RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED.
10.1 LIFECELL CORPORATION AMENDED AND RESTATED 1992 STOCK OPTION
PLAN, AS AMENDED.
27.1 FINANCIAL DATA SCHEDULE
B. REPORTS ON FORM 8-K
NONE
PAGE 13
<PAGE> 14
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED.
LIFECELL CORPORATION
DATE: AUGUST 10, 1998 BY: /S/ PAUL M. FRISON
----------------------
PAUL M. FRISON
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
DATE: AUGUST 10, 1998 BY: /S/ J. DONALD PAYNE
-----------------------
J. DONALD PAYNE
VICE PRESIDENT, CHIEF
FINANCIAL OFFICER AND
SECRETARY
DATE: AUGUST 10, 1998 BY: /S/ LYNNE P. HOHLFELD
-------------------------
LYNNE P. HOHLFELD
CONTROLLER, PRINCIPAL
ACCOUNTING OFFICER
PAGE 14
<PAGE> 15
EXHIBIT INDEX
3.1 RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
10.1 LIFECELL CORPORATION AMENDED AND RESTATED 1992 STOCK OPTION PLAN, AS
AMENDED.
27.1 FINANCIAL DATA SCHEDULE
PAGE 15
</TABLE>
EXHIBIT 3.1
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 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 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 B.2 (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).
(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 B.2. (e) (iii) 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 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) (vii) 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 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 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) (xi).
(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) 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.
(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, 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 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) $2.00 (as shall
be equitably adjusted to reflect any stock dividend, stock distribution, stock
split or reverse stock split, combination of shares, subdivision of shares or
reclassification of shares with respect to the Common Stock), or (III) in any
combination of cash and shares of Common Stock that the Corporation may
determine in its sole discretion, with the number of shares of Common Stock to
be distributed in connection therewith to be calculated on the basis set forth
in Section B.2. (f) (iv) (A) (2).
(B) No fractional shares of Common Stock or scrip shall
be issued upon payment of any dividends in shares of Common Stock upon
conversion or redemption of any shares of Series A Preferred Stock. If more
than one share of Series A Preferred Stock shall be surrendered for conversion
at any one time by the same holder, shall be held by the same holder at the time
of any automatic conversion or shall be held by the same holder at the time of
any redemption, as the case may be, the number of full shares of Common Stock
issuable upon payment of such dividends shall be computed on the basis of the
aggregate dividend amount that the Corporation has determined to pay in Common
Stock shares. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon payment of such dividends, the Corporation shall pay
out of funds legally available therefor a cash adjustment in respect of such
fractional interest, rounded to the nearest one hundredth (1/100th) of a share,
in an amount equal to that fractional interest of the then Current Market Price,
rounded to the nearest cent ($.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
B.2. (g) (iii) 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 $20.00 per share of Series A
Preferred Stock (the "Redemption Price"), at the Corporation's option and in its
sole discretion, out of funds legally available therefor (1) in cash, (2) in
shares of Common Stock, such that the number of shares of Common Stock to be
distributed in payment of the Redemption Price shall be equal to the number
obtained by dividing the dollar amount of the Redemption Price by the lesser of
(I) the Current Market Price of the Common Stock on the tenth trading day
immediately preceding the date notice of redemption is given pursuant to Section
B.2. (g) (iii) and (II) the Conversion Price on the redemption payment date, or
(3) in any combination of cash and shares of Common Stock that the Corporation
may determine in its sole discretion, with the number of shares of Common Stock
distributed in connection therewith to be calculated on the basis set forth in
Section B.2. (f) (iv) (B) (2).
(C) No fractional shares of Common Stock or scrip shall
be issued upon payment of the Redemption Price or any portion thereof in shares
of Common Stock. If more than one share of Series A Preferred Stock shall be
held by the same holder at the time of any redemption, the number of full shares
of Common Stock issuable upon payment of the Redemption Price, or any portion
thereof, shall be computed on the basis of the aggregate Redemption Price that
the Corporation has determined to pay in Common Stock shares. Instead of any
fractional shares of Common Stock which would otherwise be issuable upon payment
of any such Redemption Price, the Corporation shall pay out of funds legally
available therefor a cash adjustment in respect of such fractional interest,
rounded to the nearest one hundredth (1/100th) of a share, in an amount equal to
that fractional interest of the then Current Market Price, rounded to the
nearest cent ($.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 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.
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
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.
(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 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).
(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 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 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 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 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 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 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 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).
(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. 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).
(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, 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.
<PAGE>
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
<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").
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
CERTIFICATE OF RETIREMENT
OF
SERIES A PREFERRED STOCK
OF
LIFECELL CORPORATION
(Pursuant to Section 243 of the General Corporation Law
of the State of Delaware)
LifeCell Corporation, a Delaware corporation (the "Company"), certified as
follows:
FIRST: Article Fourth of the Company's Restated Certificate of
Incorporation, as amended, authorizes the issuance of 300,000 shares of Series A
Preferred Stock, par value $.001 per share (the "Series A Preferred Stock").
SECOND: On June 19, 1997, the Board of Directors of the Company, by
resolution, retired 300,000 shares of Series A Preferred Stock, which shares
constituted all of the authorized shares of Series A Preferred Stock.
THIRD: Article Fourth of the Company's Restated Certificate of
Incorporation, as amended, prohibits the reissuance of such shares as Series A
Preferred Stock, and, therefore, such shares are restored to the status of
authorized but undesignated shares of preferred stock of the Company.
FOURTH: Pursuant to the provisions of Section 243 of the General
Corporation Law of Delaware, all reference to Series A Preferred Stock in the
Restated Certificate of Incorporation, as amended, of the Company are hereby
eliminated.
IN WITNESS WHEREOF, LifeCell Corporation has caused this certificate to be
signed and attested by Paul M. Frison, its duly authorized officer this 19th day
of June, 1997.
LIFECELL CORPORATION
By: /s/ Paul M. Frison
--------------------------------------------
Paul M. Frison, Chairman of the Board
President and Chief Executive Officer
LIFECELL CORPORATION
CERTIFICATE OF AMENDMENT
TO
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
LifeCell Corporation, a Delaware corporation (the "Corporation"), does
hereby certify:
That the amendment set forth below to the Corporation's Restated
Certificate of Incorporation, as amended, was duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware:
1. The first paragraph of Article Fourth of the Restated Certificate of
Incorporation, as amended, is hereby amended in its entirety to read as follows:
"Fourth: The total number of shares of capital stock that the
------
Corporation shall have authority to issue is 50,000,000, of which 2,000,000
shares of the par value of $.001 per share shall be a class designated Preferred
Stock ("Preferred Stock"), and 48,000,000 shares of the par value of $.001 per
share shall be a class designated Common Stock ("Common Stock")."
In Witness Whereof, LifeCell Corporation has caused this Certificate of
Amendment to be signed by its duly authorized officer this 1 st day of June,
1998.
LIFECELL CORPORATION
By: /s/ Paul M. Frison
----------------------------------
Paul M. Frison, President
LIFECELL CORPORATION
CERTIFICATE OF AMENDMENT
. to
RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
LifeCell Corporation, a Delaware corporation (the "Corporation"), does
hereby certify:
That the amendments set forth below to the Corporation's Restated
Certificate of Incorporation, as amended, were duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware:
1. Paragraph 3(b) of the Certificate of Designation of Series B
Preferred Stock is hereby amended in its entirety to read as follows:
"(b) Directors. At any meeting of the stockholders of the
---------
Corporation held for the election of directors, (i) if at least 60,000 shares of
Series B Preferred Stock are issued and outstanding on the record date for such
meeting, the holders of Series B Preferred Stock, voting separately as a series,
shall be entitled to elect two members of the Board of Directors of the
Corporation, (ii) if less than 60,000 shares but at least 10,000 shares of
Series B Preferred Stock are issued and outstanding on the record date for such
meeting, the holders of Series B Preferred Stock, voting separately as a series,
shall be entitled to elect one member of the Board of Directors of the
Corporation and (iii) if less than 10,000 shares of Series B Preferred Stock are
issued and outstanding on the record date for such meeting, the holders of
Series B Preferred Stock, voting separately as a series, shall not be entitled
to elect any members of the Board of Directors of the Corporation."
2. Paragraph 5(b) of the Certificate of Designation of Series B
Preferred Stock is hereby amended in its entirety to read as follows:
"(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 date first occurring
after the effectiveness of the Certificate of Amendment, including this
sentence, 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)."
In Witness Whereof, LifeCell Corporation has caused this Certificate of
Amendment to be signed by its duly authorized officer this 1 st day of June,
1998.
LIFECELL CORPORATION
By: /s/ Paul M. Frison
----------------------------------
Paul M. Frison, President
EXHIBIT 10.1
LIFECELL CORPORATION
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
1. PURPOSE. This Amended and Restated 1992 Stock Option Plan (this
"Plan") of LifeCell Corporation, a Delaware corporation (the "Company"), amends
and restates the LifeCell Corporation Second Amended and Restated 1992 Stock
Option Plan, as amended, as of April 22, 1997, and is adopted for the benefit of
certain individuals who have substantial responsibility for the Company's
management and growth, and is intended to advance the interests of the Company
by providing these individuals with additional incentive by increasing their
proprietary interest in the success of the Company and thereby encouraging them
to remain in its employ or affiliation.
2. ADMINISTRATION. This Plan shall be administered by a committee to
be appointed by the Board of Directors of the Company (the "Committee"), which
Committee shall consist of not less than two members of the Board of Directors
and shall be comprised solely of members of the Board of Directors who qualify
as both non-employee directors as defined in Rule 16b-3(b)(3) of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act") and outside
directors within the meaning of Department of Treasury Regulations issued under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Board of Directors of the Company shall have the power to add or remove
members of the Committee, from time to time, and to fill vacancies thereon
arising by resignation, death, removal, or otherwise. Meetings shall be held at
such times and places as shall be determined by the Committee. A majority of
the members of the Committee shall constitute a quorum for the transaction of
business, and the vote of a majority of those members present at any meeting
shall decide any question brought before that meeting. No member of the
Committee shall be liable for any act or omission of any other member of the
Committee or for any act or omission on his own part, including but not limited
to the exercise of any power or discretion given to him under this Plan, except
those resulting from his own gross negligence or willful misconduct. All
questions of interpretation and application of this Plan, or as to options
granted hereunder (the "Options"), shall be subject to the determination, which
shall be final and binding, of a majority of the whole Committee. In carrying
out its authority under this Plan, the Committee shall have full and final
authority and discretion, including but not limited to the rights, powers and
authorities, to: (a) determine the persons to whom and the time or times at
which Options will be made, (b) determine the number of shares and the purchase
price of stock covered in each Option, subject to the terms of this Plan, (c)
determine the terms, provisions and conditions of each Option, which need not be
identical, (d) accelerate the time at which any outstanding Option may be
exercised, (e) define the effect, if any, on an Option of the death, disability,
retirement, or other termination of employment of the Optionee, (f) prescribe,
amend and rescind rules and regulations relating to administration of this Plan,
and (g) make all other determinations and take all other actions deemed
necessary, appropriate, or advisable for the proper administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties. When appropriate, this Plan shall be administered in
order to qualify certain of the Options granted hereunder as "incentive stock
options" described in Section 422 of the Code ("Incentive Stock Options").
3. DEDICATED SHARES. The stock subject to the Options and other
provisions of this Plan shall be shares of the Company's common stock, $.001 par
value (the "Stock"). Such shares may be treasury shares or authorized but
unissued shares. The total number of shares of Stock with respect to which
Incentive Stock Options may be granted shall be 1,500,000 shares. The maximum
number of shares subject to Options which may be issued to any Optionee under
this Plan during any period of three consecutive years is 500,000 shares. The
class and aggregate number of shares which may be subject to the Options granted
hereunder shall be subject to adjustment in accordance with the provisions of
Paragraph 17 hereof.
In the event that any outstanding Option expires or is surrendered for any
reason or terminates by reason of the death or other severance of employment of
the Optionee, the shares of Stock allocable to the unexercised portion of such
Option may again be subject to an Option under this Plan.
4. AUTHORITY TO GRANT OPTIONS. The Committee may grant the following
Options from time to time to such eligible individuals of the Company as it
shall from time to time determine:
(a) "Incentive Stock Options". The Committee may grant to an
eligible employee an Option, or Options, to buy a stated number of shares of
Stock under the terms and conditions of this Plan, so that the Option will be an
"incentive stock option" within the meaning of Section 422 of the Code.
(b) "Nonqualified Stock Options". The Committee may grant to an
eligible individual an Option, or Options, to buy a stated number of shares of
Stock under the terms and conditions of this Plan, even though such Option or
Options would not constitute an "incentive stock option" within the meaning of
Section 422 of the Code.
Each Option granted shall be approved by the Committee. Subject only to
any applicable limitations set forth in this Plan, the number of shares of Stock
to be covered by an Option shall be as determined by the Committee.
5. ELIGIBILITY. The individuals who shall be eligible to receive
Incentive Stock Options under this Plan shall be such full-time key employees,
including officers and directors if they are employees, of the Company, or of
any parent or subsidiary corporation, as the Committee shall determine from time
to time, provided, that no such employee who owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
corporation employing the employee or of its parent or subsidiary corporation
shall be eligible to receive an incentive stock option unless at the time that
it is granted the option price is at least 110% of the fair market value of
Stock at the time the Option is granted and the Option by its own terms is not
exercisable after the expiration of five years from the date such Option is
granted.
For the purposes of the preceding paragraph, an employee will be considered
as owning the stock owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors, and lineal
descendants; and stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust will be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries. Except as otherwise
provided, for all purposes of this Plan the term "parent corporation" shall mean
any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company if, on the date of grant of the Option in question, each
of the corporations other than the Company owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain; and the term "subsidiary corporation" shall mean any
corporation in an unbroken chain of corporations beginning with the Company if,
on the date of grant of the Option in question, each of the corporations, other
than the last corporation in the chain, owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
The individuals who shall be eligible to receive Nonqualified Stock Options
shall be such individuals as the Committee shall determine from time to time.
No individual shall be eligible to receive an Option under this Plan while
the individual is a member of the Committee.
6. OPTION PRICE. The price at which shares may be purchased pursuant
to an Option, whether it is an Incentive Stock Option or a Nonqualified Stock
Option, shall be not less than the fair market value of the shares of Stock on
the date such Option is granted and the Committee in its discretion may provide
that the price at which shares may be so purchased shall be more than such fair
market value. In the case of any employee described in Paragraph 5 who owns
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the corporation employing the employee or of its parent or
subsidiary corporation (described in Paragraph 5), the option price at which
shares may be so purchased pursuant to any Option which is an Incentive Stock
Option granted hereunder shall be not less than 110% of the fair market value of
the Stock on the date such Option is granted.
7. DURATION OF OPTIONS. No Option which is an Incentive Stock Option
shall be exercisable after the expiration of ten years from the date such Option
is granted; and the Committee in its discretion may provide that such Option
shall be exercisable throughout such ten-year period or during any lesser period
of time commencing on or after the date of grant of such Option and ending upon
or before the expiration of such ten-year period. In the case of any employee
who owns stock possessing more than ten percent of the total combined voting
power of all classes of stock of the corporation employing the employee or of
its parent or subsidiary corporation (described in Paragraph 5), no Option which
is an Incentive Stock Option shall be exercisable after the expiration of five
years from the date such Option is granted. No Option which is a Nonqualified
Stock Option shall be exercisable after the expiration of ten years from the
date such Option is granted; and the Committee in its discretion may provide
that such Option shall be exercisable throughout such ten-year period or during
any lesser period of time commencing on or after the date of grant of such
Option and ending upon or before the expiration of such ten-year period.
8. $100,000 LIMITATION ON INCENTIVE STOCK OPTIONS. To the extent that
the aggregate fair market value (determined as of the time an Incentive Option
is granted) of the Stock with respect to which Incentive Options first become
exercisable by the Optionee during any calendar year (under this Plan and any
other incentive stock option plan(s) of the Company or any parent corporation or
subsidiary corporation) exceeds $100,000, the Incentive Options shall be treated
as Nonqualified Options. In making this determination, Incentive Options shall
be taken into account in the order in which they were granted.
9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as it is
valid and outstanding, from time to time in part or as a whole, in such manner
and subject to such conditions as the Committee in its discretion may provide in
the Option agreement. However, the Committee in its absolute discretion may
accelerate the time at which any outstanding Option may be exercised.
Notwithstanding any provision of this Plan or an Option agreement to the
contrary, no Option awarded under this Plan after April 22, 1997, may be
exercised before this amendment and restatement of this Plan is approved by the
stockholders of the Company.
10. EXERCISE OF OPTIONS. Options shall be exercised by the delivery of
written notice to the Company setting forth the number of shares with respect to
which the Option is to be exercised, together with: (i) cash, certified check,
bank draft, or postal or express money order payable to the order of the Company
for an amount equal to the option price of such shares, (ii) Stock at the fair
market value on the date of exercise, or (iii) any other form of payment which
is acceptable to the Committee, and specifying the address to which the
certificates for such shares are to be mailed. As promptly as practicable after
receipt of such written notification and payment, the Company shall deliver to
the optionee certificates for the number of shares with respect to which such
Option has been so exercised, issued in the optionee's name; provided that such
delivery shall be deemed effected for all purposes when a stock transfer agent
of the Company shall have deposited such certificates in the United States mail,
addressed to the optionee, at the address specified pursuant to this Paragraph
10. If shares of Stock are used in payment of the exercise price, the aggregate
fair market value of the shares of Stock tendered must be equal to or less than
the aggregate exercise price of the shares being purchased upon exercise of the
Option, and any difference must be paid by cash, certified check, bank draft, or
postal or express money order payable to the Company. Delivery of the shares
shall be deemed effected for all purposes when a stock transfer agent of the
Company shall have deposited the certificates in the United States mail,
addressed to the Optionee, at the address specified by the Optionee.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Optionee, the Optionee shall deliver to the Company certificates registered in
the name of the Optionee representing a number of shares of Stock legally and
beneficially owned by the Optionee, free of all liens, claims, and encumbrances
of every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates, (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition of an Option.
11. TAX WITHHOLDING. The Company shall be entitled to deduct from
other compensation payable to each employee any sums required by federal, state
or local tax law to be withheld with respect to the grant or exercise of an
Option. In the alternative, the Company may require the employee (or other
individual exercising the Option) to pay the sum directly to the Company. If
the Optionee (or other individual exercising the Option) is required to pay the
sum directly, payment in cash or by check of such sums for taxes shall be
delivered within ten days after the date of exercise. The Company shall have no
obligation upon exercise of any Option until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise is sufficient to cover all sums due with respect to that exercise. The
Company shall not be obligated to advise an employee of the existence of the tax
or the amount which the employer corporation will be required to withhold.
12. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by
the optionee otherwise than by will or under the laws of descent and
distribution.
13. TERMINATION OF EMPLOYMENT OR AFFILIATION OR DEATH OF OPTIONEE.
Except as may be otherwise expressly provided herein or in the Option agreement,
Options shall terminate on the earlier of the date of the expiration of the
Option or one day less than three months after the date of the severance, upon
severance of the employment or affiliation relationship between the Company and
the optionee for any reason, for or without cause, other than death. Whether
authorized leave of absence, or absence on military or government service, shall
constitute severance of the employment or affiliation relationship between the
Company and the Optionee shall be determined by the Committee at the time
thereof. In the event of the death of the holder of an Option while in the
employ or affiliation of the Company and before the date of expiration of such
Option, such Option shall terminate on the earlier of such date of expiration or
six months following the date of such death. After the death of the Optionee,
his executors, administrators or any person or persons to whom his Option may be
transferred by will or by the laws of descent and distribution, shall have the
right, at any time prior to such termination, to exercise the Option, in whole
(subject to the provisions of Paragraph 8 hereof, but without regard to any
limitations set forth in or imposed pursuant to Paragraph 9 hereof) or in part.
An employment or affiliation relationship between the Company and the optionee
shall be deemed to exist during any period in which the optionee is employed by
or affiliated with the Company, by any parent or subsidiary corporation, by a
corporation issuing or assuming a common stock option in a transaction to which
Section 424(a) of the Code, applies, or by a parent or subsidiary corporation of
such corporation issuing or assuming a stock option (and for this purpose, the
phrase "corporation issuing or assuming a stock option" shall be substituted for
the word "Company" in the definitions of parent and subsidiary corporations
specified in Paragraph 5 of this Plan, and the parent-subsidiary relationship
shall be determined at the time of the corporate action described in Section
424(a) of the Code).
14. REQUIREMENTS OF LAW. The Company shall not be required to sell or
issue any shares under any Option if the issuance of such shares shall
constitute a violation by the optionee or the Company of any provisions of any
law or regulation of any governmental authority. Each Option granted under this
Plan shall be subject to the requirements that, if at any time the Committee
shall determine that the listing, registration or qualification of the shares
subject thereto upon any securities exchange or under any state or federal law
of the United States or of any other country or governmental subdivision
thereof, or the consent or approval of any governmental regulatory body, or
investment or other representations, are necessary or desirable in connection
with the issue or purchase of shares subject thereto, no such Option may be
exercised in whole or in part unless such listing, registration, qualification,
consent, approval or representations shall have been effected or obtained free
of any conditions not acceptable to the Committee. In connection with any
applicable statute or regulation relating to the registration of securities,
upon exercise of any Option, the Company shall not be required to issue any
Stock unless the Committee has received evidence satisfactory to it to the
effect that the holder of that Option will not transfer the Stock except in
accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. Any determination by the Committee on these matters shall
be final, binding and conclusive. In the event the shares issuable on exercise
of an Option are not registered under applicable securities laws of any country
or any political subdivision the Company may imprint on the certificate for such
shares the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with applicable law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws of any
state and may not be sold or transferred except upon such registration or upon
receipt by the Company of an opinion of counsel satisfactory to the Company, in
form and substance satisfactory to the Company, that registration is not
required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to applicable securities laws of any country or any
political subdivision (as now in effect or as hereafter amended) and, in the
event any shares are so registered, the Company may remove any legend on
certificates representing such shares. The Company shall not be obligated to
take any other affirmative action in order to cause the exercise of an Option or
the issuance of shares pursuant thereto to comply with any law or regulation or
any governmental authority.
15. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a
stockholder with respect to shares covered by his Option until the date of
issuance of a stock certificate for such shares; and, except as otherwise
provided in Paragraph 17 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
such certificate.
16. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of any Option
shall not impose upon the Company any obligation to employ or affiliate with or
continue to employ or affiliate with any optionee; and the right of the Company
to terminate the employment or affiliation of any officer, employee or other
individual shall not be diminished or affected by reason of the fact that an
Option has been granted to him.
17. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of Stock outstanding, without receiving
compensation therefor in money, services or property, then (a) the number, class
and per share price of shares of stock subject to outstanding Options hereunder
shall be appropriately adjusted in such a manner as to entitle an optionee to
receive upon exercise of an Option, for the same aggregate cash consideration,
the same total number and class or classes of shares as he would have received
had he exercised his Option in full immediately prior to the event requiring the
adjustment, disregarding any fractional shares; and (b) the number and class of
shares then reserved for issuance under this Plan shall be adjusted by
substituting for the total number and class of shares of stock then reserved for
the number and class or classes of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Stock as the result of
the event requiring the adjustment, disregarding any fractional shares.
If the Company merges or consolidates with another corporation, whether or
not the Company is a surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under this Plan, or if any "person" (as that term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act) is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing greater than 50% of the combined voting power of the Company's then
outstanding securities, (i) subject to the provisions of clause (iii) below,
after the effective date of such merger, consolidation, liquidation, sale or
other disposition, or change in beneficial ownership, as the case may be, each
holder of an outstanding Option shall be entitled, upon exercise of such Option,
to receive, in lieu of shares of Stock, the number and class or classes of
shares of such stock or other securities or property to which such holder would
have been entitled if, immediately prior to such merger, consolidation,
liquidation, sale or other disposition, or change in beneficial ownership, such
holder had been the holder of record of a number of shares of Stock equal to the
number of shares as to which such Option may be exercised; (ii) the Board of
Directors may waive any limitations set forth in or imposed pursuant hereto so
that all Options, from and after a date prior to the effective date of such
merger, consolidation, liquidation, sale or other disposition, or change in
beneficial ownership, as the case may be, specified by the Board of Directors,
shall be exercisable in full; and (iii) all outstanding Options may be canceled
by the Board of Directors as of the effective date of any such merger,
consolidation, liquidation, sale or other disposition or change in beneficial
ownership.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Stock then subject to
outstanding Options.
18. SUBSTITUTION OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become employees of the Company, or whose employer
is about to become a parent or subsidiary corporation, conditioned in the case
of an incentive stock option upon the employee becoming an employee as the
result of a merger or consolidation of the Company with another corporation, or
the acquisition by the Company of substantially all the assets of another
corporation, or the acquisition by the Company of at least 50% of the issued and
outstanding stock of another corporation as the result of which it becomes a
subsidiary of the Company. The terms and conditions of the substitute Options
so granted may vary from the terms and conditions set forth in this Plan to such
extent as the Board of Directors of the Company at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the stock
options in substitution for which they are granted, but with respect to stock
options which are incentive stock options, no such variation shall be such as to
affect the status of any such substitute option as an "incentive stock option"
under Section 422 of the Code.
19. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may
modify, revise or terminate this Plan at any time and from time to time,
provided that without the further approval of the holders of at least a majority
of the votes of the outstanding shares of voting stock present in person or by
proxy and entitled to vote thereon, or if the provisions of the corporate
charter, by-laws or applicable state law prescribe a greater degree of
stockholder approval for this action, without the degree of stockholder approval
thus required, the Board of Directors may not (a) increase the aggregate number
of shares which may be issued under Options granted pursuant to the provisions
of this Plan; (b) materially increase the benefits accruing to participants
under this Plan; (c) change the class of employees eligible to receive incentive
stock options; or (d) materially modify the requirements as to eligibility for
participation in this Plan, provided, further, that the Board shall have the
power to make such changes in this Plan and in the regulations and
administrative provisions hereunder or in any outstanding Option as in the
opinion of counsel for the Company may be necessary or appropriate from time to
time to enable any Option granted pursuant to this Plan to qualify as incentive
stock options under Section 422 of the Code, and the regulations which may be
issued thereunder as in existence from time to time. All Options granted under
this Plan shall be subject to the terms and provisions of this Plan and any
amendment, modification or revision of this Plan shall be deemed to amend,
modify or revise all Options outstanding under this Plan at the time of such
amendment, modification or revision. In the event this Plan is terminated by
action of the Board of Directors, all Options outstanding under this Plan may be
terminated.
20. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied
in a written agreement, which shall be subject to the terms and conditions
prescribed above, and shall be signed by the Optionee and by an officer of the
Company on behalf of the Committee and the Company. Such an Option agreement
shall contain such other provisions as the Committee in its discretion shall
deem advisable which are not inconsistent with the terms of this Plan.
21. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. The
Company will, to the fullest extent permitted by law, indemnify, defend and hold
harmless any person who at any time is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(whether civil, criminal, administrative or investigative) in any way relating
to or arising out of this Plan or any Option or Options granted hereunder by
reason of the fact that such person is or was at any time a director of the
Company or a member of the Committee against judgments, fines, penalties,
settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding.
This right of indemnification will inure to the benefit of the heirs, executors
and administrators of each such person and is in addition to all other rights to
which such person may be entitled by virtue of the by-laws of the Company or as
a matter of law, contract or otherwise.
22. NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
23. GENDER. If the context requires, words of one gender when used in
this Plan shall include the others and words used in the singular or plural
shall include the other.
24. HEADINGS. Headings of Sections are included for convenience of
reference only and do not constitute part of this Plan and shall not be used in
construing the terms of this Plan.
25. OTHER OPTIONS. The grant of an Option shall not confer upon an
Optionee the right to receive any future or other Options under this Plan,
whether or not Options may be granted to similarly situated Optionees, or the
right to receive future Options upon the same terms or conditions as previously
granted.
26. ARBITRATION OF DISPUTES. Any controversy arising out of or
relating to this Plan or an Option Agreement shall be resolved by arbitration
conducted pursuant to the arbitration rules of the American Arbitration
Association. The arbitration shall be final and binding on the parties.
27. GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
28. EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT OF PLAN. This Plan
shall become effective and shall be deemed to have been adopted on April 22,
1997, if within one year of that date it shall have been approved by the holders
of at least a majority of the votes of the outstanding shares of voting stock of
the Company at a duly held stockholders' meeting, or if the provisions of the
corporate charter, by-laws or applicable state law prescribe a greater degree of
stockholder approval for this action, the approval by the holders of that
percentage, at a duly held meeting of stockholders. No Options shall be granted
pursuant to this Plan after January 16, 2002.
<PAGE>
FIRST AMENDMENT
TO
LIFECELL CORPORATION
AMENDED AND RESTATED
1992 STOCK OPTION PLAN
1. Paragraph 3 of the LifeCell Corporation Amended and Restated 1992 Stock
Option Plan is hereby deleted in its entirety and replaced by the following:
The stock subject to the Options and other provisions of this Plan shall be
shares of the Company's common stock, $.001 par value (the "Stock"). Such
shares may be treasury shares or authorized but unissued shares. The total
number of shares of Stock with respect to which Incentive Stock Options may be
granted shall be 2,500,000 shares. The maximum number of shares subject to
Options which may be issued to any Optionee under this plan during any period of
three consecutive years is 500,000 shares. The class and aggregate number of
shares which may be subject to the Options granted hereunder shall be subject to
adjustment in accordance with the provisions of Paragraph 17 hereof.
In the event that any outstanding Option expires or is surrendered for any
reason or terminates by reason of the death or other severance of employment of
the Optioneee, the shares of Stock allocable to the unexercised portion of such
Option may again be subject to an Option under this Plan.
2. Except as expressly amended by this First Amendment, the LifeCell
Corporation Amended and Restated 1992 Stock Option Plan shall continue in full
force and effect in accordance with its terms.
ADOPTED BY THE BOARD OF DIRECTORS ON THE 12 TH DAY OF MARCH, 1998 AND APPROVED
BY THE STOCKHOLDERS ON THE 27 TH DAY OF MAY, 1998.
LIFECELL CORPORATION
BY: /S/ J. DONALD PAYNE
--------------------
J. DONALD PAYNE
SECRETARY
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