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EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF ISTA PHARMACEUTICALS, INC.
ARTICLE I
The name of this corporation is Ista Pharmaceuticals, Inc.
ARTICLE II
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Zip Code 19801. The name of its registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
1. Capital Stock. This corporation is authorized to issue two classes of
shares designated "Common Stock" and "Preferred Stock." The number of shares of
Common Stock authorized to be issued is 40,000,000 with a par value of $0.001
per share; the number of shares of Preferred Stock authorized to be issued is
26,933,878 with a par value of $0.001 per share. 1,951,753 shares of Preferred
Stock are designated as Series A Preferred Stock, 1,951,753 shares of Preferred
Stock are designated as Series A-1 Preferred Stock, 1,955,555 shares of
Preferred Stock are designated as Series B Preferred Stock, 1,955,555 shares of
Preferred Stock are designated as Series B-1 Preferred Stock, 6,600,000 shares
of Preferred Stock are designated as Series C Preferred Stock, 6,600,000 shares
of Preferred Stock are designated as Series C-1 Preferred Stock, 2,959,631
shares of Preferred Stock are designated as Series D Preferred Stock and
2,959,631 shares of Preferred Stock are designated as Series D-1 Preferred
Stock. The Series A Preferred Stock and the Series A-1 Preferred Stock are
hereafter collectively referred to as the "Preferred A Shares." The Series B
Preferred Stock and the Series B-1 Preferred Stock are hereafter collectively
referred to as the "Preferred B Shares." The Series C Preferred Stock and the
Series C-1 Preferred Stock are hereafter collectively referred to as the
"Preferred C Shares." The Series D Preferred Stock and the Series D-1 Preferred
Stock are hereafter collectively referred to as the "Preferred D Shares." The
Preferred A Shares, Preferred B Shares, Preferred C Shares and Preferred D
Shares are hereafter collectively referred to as the "Preferred Stock."
2. Designation of Series. The Preferred Stock may be issued from time
to time in one or more series. The board of directors is authorized to fix the
number of shares of any Series of Preferred Stock and to determine the
designation of any such series. The board of directors is also authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or
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imposed upon any wholly unissued Series of Preferred Stock. Within the limits
and restrictions stated in any resolution or resolutions of the board of
directors originally fixing or specifying the number of shares constituting any
Series of Preferred Stock, the board of directors is authorized to increase or
decrease (but not below the number of shares of any such Series outstanding) the
number of shares of any such Series subsequent to the issue of shares of that
series. In case the number of shares of any Series shall be so decreased, the
shares constituting such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.
ARTICLE V.
The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and Preferred Stock are as follows:
1. Dividend Provisions. The holders of the Preferred A Shares, Preferred
B Shares, Preferred C Shares and Preferred D Shares shall be entitled, when and
if declared by the board of directors of the corporation and prior to any
payment or declaration of any dividend to the holders of Common Stock, to annual
dividends at the rate of $0.08, $0.22, $0.45 and $0.45 per share, respectively
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares). The right to such dividends, if
declared by the board of directors, shall be cumulative. No right shall accrue
to the holders of such shares by reason of the failure of the board of directors
to declare and set apart dividends thereupon for any period. No dividends or
other distributions shall be made with respect to the Common Stock nor shall any
shares of Common Stock of the Company be purchased, redeemed or otherwise
acquired for value by the Company (except for acquisitions of Common Stock by
the Company pursuant to agreements which permit the Company to repurchase such
shares upon termination of services to the Company) until cumulative dividends
on the Preferred Stock shall have been declared and paid or set apart.
2. Liquidation Preference.
(a) Preferred Preference. In the event of any liquidation,
dissolution or winding up of this corporation, either voluntary or involuntary,
the holders of the Preferred A Shares, Preferred B Shares, Preferred C Shares
and Preferred D Shares shall be entitled to receive, prior and in preference to
any distribution of any of the assets of this corporation to the holders of
Common Stock by reason of their ownership thereof, an amount per share equal to
$1.00 for each outstanding Preferred A Share, $2.75 for each outstanding
Preferred B Share, $5.63 for each outstanding Preferred C Share and $5.63 for
each outstanding Preferred D Share (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), plus an amount equal to any declared but unpaid dividends on such
share. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Preferred A Shares, Preferred B Shares,
Preferred C Shares and Preferred D Shares shall be insufficient to permit the
payment to such holders of the full aforesaid amounts, then, the entire assets
and funds of this corporation legally available for distribution shall be
distributed ratably among the holders of the Preferred Stock in proportion to
the preferential amount each such holder is otherwise entitled to receive.
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After payment has been made to the holders of the Preferred Stock of the
full amounts to which they shall be entitled as aforesaid, the holders of Common
Stock shall receive pro rata any remaining assets of the corporation that are
legally available for distribution.
(b) Mergers. A merger, reorganization, or sale of all or
substantially all of the assets of this corporation in which the stockholders of
this corporation immediately prior to the transaction possess less than 50% of
the voting power of the surviving entity (or its parent) immediately after the
transaction (together referred to herein as a "Merger") shall be deemed to be a
liquidation, dissolution or winding up within the meaning of this Section 2. Any
securities to be delivered to the holders of Preferred Stock and Common Stock
upon a Merger shall be valued as follows:
(i) if traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 30-day period ending three (3) business days prior to the
closing;
(ii) if actively traded over-the-counter, the value shall
be deemed to be the average of the closing bid prices over the 30-day period
ending three (3) business days prior to the closing; and
(iii) if there is no active public market, the value shall
be the fair market value thereof as approved by the affirmative vote or written
consent of the corporation and the holders of not less than (i) 70% of the
outstanding shares of Preferred A Shares and Preferred B Shares, each voting
separately, and (ii) 50% of the outstanding shares of Preferred C Shares and
Preferred D Shares, voting as one class; provided that if no such affirmative
vote is reached, then by independent appraisal by an investment banker hired and
paid by the corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
(c) Consent for Certain Repurchase. Each holder of an outstanding
share of Preferred Stock shall be deemed to have consented, for purposes of
Sections 502, 503 and 506 of the General Corporation Law, to distributions made
by the corporation in connection with the repurchase of shares of Common Stock
issued to or held by employees or consultants upon termination of their
employment or services pursuant to agreements providing for the right of said
repurchase between the corporation and such persons.
3. Voting Rights.
(a) The holder of each share of Preferred Stock shall be entitled
to notice of any stockholders' meeting in accordance with the bylaws of the
corporation and shall vote with holders of the Common Stock upon the election of
directors and upon any other matter submitted to a vote of stockholders, except
those matters required by law to be submitted to a class vote and except as
otherwise set forth herein. The holder of each share of Preferred Stock shall be
entitled to that number of votes equal to the number of shares of Common Stock
into which each share of Preferred Stock could be converted on the record date
for the vote or consent of stockholders. Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares of Preferred Stock held by each holder) shall be
disregarded.
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(b) Board of Directors. Notwithstanding the foregoing, the
holders of Preferred A Shares, voting separately, shall be entitled to elect one
(1) director of the corporation. The holders of Preferred B Shares, voting
separately, shall be entitled to elect one (1) director of the corporation. The
holders of Preferred C Shares, voting separately, shall be entitled to elect one
(1) director of the corporation. The holders of Preferred D Shares, voting
separately, shall be entitled to elect one (1) director of the corporation. The
holders of Preferred Stock and Common Stock, voting together as a class, shall
be entitled to elect all remaining directors of the corporation. Notwithstanding
any Bylaw provision to the contrary, the stockholders entitled to elect a
particular director shall be entitled to remove such director or to fill a
vacancy in the seat formerly held by such director, all in accordance with the
applicable provisions of the Delaware General Corporation Law.
4. Conversion. The holders of the Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Except for Series D Shares, each share of
Preferred Stock shall be convertible into shares of Common Stock without the
payment of any additional consideration by the holder thereof and, at the option
of the holder thereof, at any time after the date of issuance of such share, at
the office of the corporation or any transfer agent for the Preferred Stock. The
Series D Shares shall be convertible into shares of Common Stock without the
payment of any additional consideration by the holder thereof and, at the option
of the holder thereof, at any time after September 30, 2000, at the office of
the corporation or any transfer agent for the Preferred Stock; provided,
however, that each Series D Share may be convertible into shares of Common Stock
without the payment of any additional consideration by the holder thereof if a
liquidation, dissolution or winding up of this corporation occurs, as set forth
in Section 2 of Article IV, prior to October 1, 2000. Each share of Preferred
Stock shall be convertible into the number of fully paid and nonassessable
shares of Common Stock which results from dividing the Conversion Price (as
hereinafter defined) per share in effect for each series of Preferred Stock at
the time of conversion into the per share Conversion Value (as hereinafter
defined) of such series. The initial Conversion Price per share of Series A
Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series
B-1 Preferred Stock, Series C Preferred Stock and Series C-1 Preferred Stock
shall be $1.00, $1.00, $2.75, $2.75, $5.63 and $5.63, respectively. The initial
Conversion Price per share of Series D Preferred Stock and Series D-1 Preferred
Stock shall be $5.63 per share; provided, however, if a Qualified Initial Public
Offering (as defined below) occurs prior to October 1, 2000, the Conversion
Price per share of Series D Preferred Stock and Series D-1 Preferred Stock shall
equal to the offering price, net of underwriting discounts and commissions, of
Common Stock sold in such Qualified Initial Public Offering. The per share
Conversion Value of Series A Preferred Stock, Series A-1 Preferred Stock, Series
B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, Series
C-1 Preferred Stock, Series D Preferred Stock and Series D-1 Preferred Stock
shall be $1.00, $1.00, $2.75, $2.75, $5.63, $5.63, $5.63 and $5.63,
respectively. The initial Conversion Price of each Series of Preferred Stock
shall be subject to adjustment from time to time as provided below. The number
of shares of Common Stock into which a share of Preferred Stock is convertible
is hereinafter referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at its then effective
Conversion Rate (i) immediately upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration
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statement under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock in which (a) the public offering price equals or exceeds
$7.00 per share (adjusted to reflect subsequent stock dividends, stock splits or
recapitalization) and (b) the aggregate proceeds raised, equal or exceed
$15,000,000 (the "Qualified Initial Public Offering"), or (ii) the date
specified by written consent or the affirmative vote of the holders of (i) not
less than 70% of the outstanding shares of Preferred A Shares and Preferred B
Shares, each voting separately, and (ii) more than 50% of the outstanding shares
of Preferred C Shares and Preferred D Shares, voting as one class. Upon such
automatic conversion, any declared and unpaid dividends shall be paid in
accordance with the provisions of Section 4(c).
(c) Mechanics of Conversion. Before any holder of Preferred Stock
shall be entitled to convert the same into shares of Common Stock, he shall
surrender the certificate(s) therefor, duly endorsed, at the office of the
corporation or of any transfer agent for the Preferred Stock and shall give
written notice to the corporation at such office that he elects to convert the
same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 4(b)
hereof). The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock certificate(s) for the
number of shares of Common Stock to which such holder shall be entitled as
aforesaid and the corporation shall promptly pay in cash, or to the extent
sufficient funds are not legally available therefor, in Common Stock (at the
Common Stock's fair market value determined by the board of directors as of the
date of such conversion), any declared and unpaid dividends on the shares of
Preferred Stock being converted. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Preferred Stock to be converted (except that in the case of an
automatic conversion pursuant to Section 4(b)(i) hereof such conversion shall be
deemed to have been made immediately prior to the closing of the offering
referred to in Section 4(b)(i)) and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date.
(d) Fractional Shares. In lieu of any fractional shares to which
the holder of Preferred Stock would otherwise be entitled, the corporation shall
pay cash equal to such fraction multiplied by the fair market value of one share
of such Series of Preferred Stock as determined by the board of directors of the
corporation. Whether or not fractional shares are issuable upon such conversion
shall be determined on the basis of the total number of shares of Preferred
Stock of each holder at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
(e) Adjustment of Conversion Price.
(i) For purposes of this Section 4(e), the following
definitions shall apply:
(1) "Excluded Stock" shall mean:
(A) all shares of Common Stock issued and
outstanding on the date this document is filed with the Delaware Secretary of
State;
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(B) all shares of Preferred Stock and the
Common Stock into which the shares of Preferred Stock are convertible;
(C) up to 4,750,000 shares of Common Stock,
warrants or options to purchase Common Stock or other securities previously
issued or issuable to officers, directors, consultants or employees of the
corporation pursuant to any plan or arrangement approved by the board of
directors of the corporation;
(D) up to 1,153,877 shares of Common Stock
or warrants to purchase Common Stock issued pursuant to the exercise of warrants
to purchase Common Stock on such terms as are approved by the board of directors
of the corporation; and
(E) up to 3,319,363 shares of Common Stock
issued pursuant to the Call Option Agreement dated June 27,1997.
(F) up to 1,183,432 shares of Common Stock
or Series D Preferred Stock (or any combination thereof) issued or issuable
pursuant to the Credit Agreement between the corporation and an affiliate of the
initial purchaser of Series D Preferred Stock.
All outstanding shares of Excluded Stock
(including any shares issuable upon conversion of the Preferred Stock) shall be
deemed to be outstanding for all purposes of the computations of Section
4(e)(iii) below.
(2) "Financing" shall mean any issuance of Common
Stock (including securities exercisable for or convertible into Common Stock) in
a transaction where the holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock are offered an
opportunity to purchase their Preferred Stock Pro Rata Share of the additional
shares of Common Stock (including securities exercisable for or convertible into
Common Stock) issued in such transaction.
(3) "Preferred Stock Pro Rata Share" shall mean the
amount determined by multiplying the total number of shares of Common Stock
(including securities exercisable for or convertible into Common Stock) offered
for sale by the corporation in a Financing to the holders of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock by a fraction, (x) the numerator of which is the total number of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock (on an as-converted basis) held by such holder and (y)
the denominator of which is the total number of shares of Common Stock
(including securities convertible into Common Stock) then outstanding.
(4) "Series A Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series A Preferred Stock in effect on the date of and
immediately prior to such issue.
(5) "Series B Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a
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Financing for a consideration per share less than the Conversion Price of the
Series B Preferred Stock in effect on the date of and immediately prior to such
issue.
(6) "Series C Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series C Preferred Stock in effect on the date of and
immediately prior to such issue.
(7) "Series D Dilutive Issuance" shall mean an
issuance of Common Stock (including securities exercisable for or convertible
into Common Stock) in a Financing for a consideration per share less than the
Conversion Price of the Series D Preferred Stock in effect on the date of and
immediately prior to such issue.
(8) "Participating Holder" shall mean any holder or an
affiliate holder of Series A Preferred Stock that purchases at least its
Preferred Stock Pro Rata Share of a Series A Dilutive Issuance, any holder of
Series B Preferred Stock that purchases at least its Preferred Stock Pro Rata
Share of a Series B Dilutive Issuance, any holder of Series C Preferred Stock
that purchases at least its Preferred Stock Pro Rata share of a Series C
Dilutive Issuance and any holder of Series D Preferred Stock that purchases at
least its Preferred Stock Pro Rata share of a Series D Dilutive Issuance.
(9) "Non-Participating Holder" shall mean any holder
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock that is not a Participating Holder.
(ii) Shadow Preferred. In the event the corporation issues
additional shares of Common Stock (including securities exercisable for or
convertible into Common Stock) other than Excluded Stock in a Series A Dilutive
Issuance, each share of Series A Preferred Stock held by each and every
Nonparticipating Holder shall, immediately prior to the closing of the
applicable Series A Dilutive Issuance, be automatically converted into one fully
paid and nonassessable share of Series A-1 Preferred Stock plus such number of
fully paid and nonassessable shares of Common Stock based on the Series A Forced
Conversion Rate (as defined below). The "Series A Forced Conversion Rate" shall
be equal to the difference between the Conversion Rates in effect for the Series
A Preferred Stock and the Series A-1 Preferred Stock immediately prior to the
closing of the applicable Series A Dilutive Issuance. In the event the
corporation issues additional shares of Common Stock (including securities
exercisable for or convertible into Common Stock) other than Excluded Stock in a
Series B Dilutive Issuance, each share of Series B Preferred Stock held by each
and every Nonparticipating Holder shall, immediately prior to the closing of the
applicable Series B Dilutive Issuance, be automatically converted into one fully
paid and nonassessable share of Series B-1 Preferred Stock plus such number of
fully paid and nonassessable shares of Common Stock based on the Series B Forced
Conversion Rate (as defined below). The "Series B Forced Conversion Rate" shall
be equal to the difference between the Conversion Rates in effect for the Series
B Preferred Stock and the Series B-1 Preferred Stock immediately prior to the
closing of the applicable Series B Dilutive Issuance. In the event the
corporation issues additional shares of Common Stock (including securities
exercisable for or convertible into Common Stock) other than Excluded Stock in a
Series C Dilutive Issuance, each share of Series C Preferred Stock
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held by each and every Nonparticipating Holder shall, immediately prior to the
closing of the applicable Series C Dilutive Issuance, be automatically converted
into one fully paid and nonassessable share of Series C-1 Preferred Stock plus
such number of fully paid and nonassessable shares of Common Stock based on the
Series C Forced Conversion Rate (as defined below). The "Series C Forced
Conversion Rate" shall be equal to the difference between the Conversion Rates
in effect for the Series C Preferred Stock and the Series C-1 Preferred Stock
immediately prior to the closing of the applicable Series C Dilutive Issuance.
In the event the corporation issues additional shares of Common Stock (including
securities exercisable for or convertible into Common Stock) other than Excluded
Stock in a Series D Dilutive Issuance, each share of Series D Preferred Stock
held by each and every Nonparticipating Holder shall, immediately prior to the
closing of the applicable Series D Dilutive Issuance, be automatically converted
into one fully paid and nonassessable share of Series D-1 Preferred Stock plus
such number of fully paid and nonassessable shares of Common Stock based on the
Series D Forced Conversion Rate (as defined below). The "Series D Forced
Conversion Rate" shall be equal to the difference between the Conversion Rates
in effect for the Series D Preferred Stock and the Series D-1 Preferred Stock
immediately prior to the closing of the applicable Series D Dilutive Issuance.
Upon the conversion of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock held by a Nonparticipating
Holder as set forth herein, such shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall no
longer be outstanding on the books of the corporation and the Nonparticipating
Holder shall be treated for all purposes as the record holder of such shares of
Series A-1 Preferred Stock, Series B-1 Preferred Stock, Series C-1 Preferred
Stock and Series D-1 Preferred Stock, and, if applicable Common Stock on the
date of the closing of the applicable Series A Dilutive Issuance, Series B
Dilutive Issuance, Series C Dilutive Issuance or Series D Dilutive Issuance, as
the case may be. The corporation shall, as soon as practicable following the
delivery of certificates representing such converted shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock, issue and deliver to such holder of such converted shares of
Preferred Stock a certificate or certificates for the number of shares of Series
A-1 Preferred Stock, Series B-1 Preferred Stock, Series C-1 Preferred Stock and
Series D-1 Preferred Stock, and, if applicable, Common Stock to which such
holder shall be entitled as aforesaid.
(iii) Adjustment of Conversion Price for Issuance of
Common Stock. No adjustment in the Conversion Price of Series A-1 Preferred
Stock, Series B-1 Preferred Stock, Series C-1 Preferred Stock or Series D-1
Preferred Stock shall be made in respect of the issuance of additional shares of
Common Stock (other than in the event of stock dividends, subdivisions,
split-ups, combinations or recapitalizations which are covered by Sections 4(e)
(iv), (v), (vi) and (vii)). The Conversion Price of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
shall be subject to adjustment from time to time as follows:
If the corporation shall issue, or is deemed by express provisions
herein to issue, any Common Stock other than Excluded Stock, for a consideration
per share less than the Conversion Price for a Series of Preferred Stock in
effect immediately prior to the issuance of such Common Stock (excluding stock
dividends, subdivisions, split-ups, combinations, dividends or recapitalizations
which are covered by Sections 4(e) (iv), (v), (vi) and (vii)), the Conversion
Price in effect immediately after each such issuance shall forthwith (except as
provided in this Section 4(e)) be adjusted to a price equal to the quotient
obtained by dividing:
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(A) an amount equal to the sum of
(x) the total number of shares of
Common Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock or exercise or conversion of all other rights,
options or convertible or exchangeable securities) immediately prior to such
issuance multiplied by the Conversion Price in effect immediately prior to such
issuance, plus
(y) the consideration received by
the corporation upon such issuance, by
(B) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon conversion
of the Preferred Stock or exercise or conversion of all other rights, options or
convertible or exchangeable securities) immediately prior to such issuance plus
the additional shares of Common Stock issued in such issuance (but not including
any additional shares of Common Stock deemed to be issued as a result of any
adjustment in the Conversion Price resulting from such issuance).
For purposes of any adjustment of the
Conversion Price pursuant to this clause (iii), the following provisions shall
be applicable:
(1) In the case of the issuance of
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts or commissions paid or incurred
by the corporation in connection with the issuance and sale thereof.
(2) In the case of the issuance of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined by the board of directors of the corporation, in
accordance with generally accepted accounting treatment; provided, however, that
if, at the time of such determination, the corporation's Common Stock is traded
in the over-the-counter market or on a national or regional securities exchange,
such fair market value as determined by the board of directors of the
corporation shall not exceed the aggregate "Current Market Price" (as defined
below) of the shares of Common Stock being issued.
(3) In the case of the issuance of
(i) options to purchase or rights to subscribe for Common Stock (other than
Excluded Stock), (ii) securities by their terms convertible into or exchangeable
for Common Stock (other than Excluded Stock), or (iii) options to purchase or
rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subdivisions
(1) and (2) above), if any, received by the corporation upon the issuance of
such options
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or rights plus the minimum purchase price provided in such options or rights for
the Common Stock covered thereby;
(B) the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration received
by the corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received by
the corporation upon the conversion or exchange of such securities or the
exercise of any related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (1) and (2) above);
(C) on any change in the
number of shares of Common Stock deliverable upon exercise of any such options
or rights or conversion of or exchange for such convertible or exchangeable
securities, or on any change in the minimum purchase price of such options,
rights or securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment made upon (x) the issuance of such options, rights or securities not
exercised, converted or exchanged prior to such change, as the case may be, been
made upon the basis of such change or (y) the options or rights related to such
securities not converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change; and
(D) on the expiration of any
such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(iv) If the number of shares of Common Stock outstanding
at any time after the date hereof is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, on the date such payment is made or such change is effective, the
Conversion Price of each Series of Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
any shares of such Series of Preferred Stock shall be increased in proportion to
such increase of outstanding shares.
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(v) If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Conversion Price of each Series of Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
any shares of such Series of Preferred Stock shall be decreased in proportion to
such decrease in outstanding shares.
(vi) In case the corporation shall declare a cash dividend
upon its Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of this capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of Preferred Stock shall, concurrent with the distribution to holders of
Common Stock, receive a like distribution based upon the number of shares of
Common Stock into which each Series of Preferred Stock is convertible.
(vii) In case, at any time after the date hereof, of any
capital reorganization, or any reclassification of the stock of the corporation
(other than as a result of a stock dividend or subdivision, split-up or
combination of shares), or the consolidation or merger of the corporation with
or into another person (other than a consolidation or merger in which the
corporation is the continuing entity and which does not result in any change in
the Common Stock), or of the sale or other disposition of all or substantially
all the properties and assets of the corporation, the shares of Preferred Stock
shall, after such reorganization, reclassification, consolidation, merger, sale
or other disposition, be convertible into the kind and number of shares of stock
or other securities or property of the corporation or otherwise to which such
holder would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition he had
converted his shares of Preferred Stock into Common Stock. The provisions of
this clause (vi) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other dispositions.
(viii) All calculations under this Section 4 shall be made
to the nearest cent or to the nearest one hundredth (1/100) of a share, as the
case may be.
(f) Minimal Adjustments. No adjustment in the Conversion Price
need be made if such adjustment would result in a change in the Conversion Price
of less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Conversion Price.
(g) No Impairment. The corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be
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necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this Section 4,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such Series at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversions of such holder's shares of
Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property or to receive any other right, the corporation
shall mail to each holder of Preferred Stock at least ten (10) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Preferred Stock such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Preferred Stock, the
corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(k) Notices. Any notice required by the provisions of this
Section 4 to be given to the holder of shares of Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at his address appearing on the books of the corporation.
(l) Reissuance of Converted Shares. No shares of Preferred Stock
which have been converted into Common Stock after the original issuance thereof
shall ever again be reissued and all such shares so converted shall upon such
conversion cease to be a part of the authorized shares of the corporation.
5. Protective Provisions. In addition to any other rights provided by
law, so long as at least 500,000 shares of Preferred Stock shall be outstanding,
this corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least (i)
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70% of the outstanding shares of Preferred A Shares and Preferred B Shares, each
voting separately, and (ii) a majority of the outstanding shares of Preferred C
Shares and Preferred D Shares, voting as one class; provided, however, that if
Preferred C Shares are treated differently than Preferred D Shares, a majority
of the outstanding shares of Preferred C Shares and Preferred D Shares, each
voting separately:
(a) Increase or decrease the aggregate number of authorized
shares of Preferred Stock and Common Stock;
(b) Create a new class or Series of shares having rights,
preferences or privileges or increase the number of authorized shares of any
class or shares having rights, preferences or privileges on parity or with or
senior to the shares of any class or Series of Preferred Stock;
(c) Apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, of any shares of any class or
Series of Common Stock except pursuant to agreements with directors, employees
and consultants of this corporation which permit the corporation to repurchase
such shares upon termination of services to the corporation;
(d) Change the rights, preferences, privileges or restrictions of
the Preferred Stock;
(e) Amend, alter or repeal any provision of the Amended and
Restated Articles of Incorporation or Bylaws of this corporation (including any
filing of a Certificate of Determination) that affects adversely the voting
powers, preferences, or other special rights or privileges, qualifications, or
restrictions of the Preferred Stock;
(f) Approve any agreement by the Company or its stockholders
regarding a Merger (as defined in Section 2(b)).
(g) Grant more favorable antidilution provisions than those
granted to the Preferred Stock; or
(h) Alter or amend this Section 5.
ARTICLE VI
The following is applicable to the Common Stock:
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up
of the corporation, the assets of the corporation shall be distributed as
provided in Section 3 of Article Five hereof.
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3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of the corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE VII
The corporation is to have perpetual existence.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of the Corporation.
ARTICLE IX
The election of directors need not be by written ballot unless the
Bylaws of the corporation shall so provide.
ARTICLE X
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as may hereafter be amended, 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. The corporation
shall indemnify to the fullest extent permitted by the law, any person made or
threatened to be made a party, to any action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact the he or she, or
his or her testator or intestate, is or was a director or officer of the
corporation or any predecessor of the corporation, or serves or served at any
other enterprise as a director or officer at the request of the corporation or
any predecessor to the corporation. Neither any amendment nor repeal of this
Article, nor the adoption of any provision of this Certificate of Incorporation
inconsistent with this Article, shall eliminate or reduce the effect of this
Article in respect of any matter occurring, or any cause of action, suit or
claim that, but for this Article, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
ARTICLE XI
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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ARTICLE XII
The name and mailing address of the incorporator are:
J.C. MacRae
15279 Alton Parkway
Building 100
Irvine, California 92618
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I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying,
under penalties of perjury, that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 31st day of May,
2000.
/s/ J.C. MacRae
-----------------------------
J.C. MacRae, Incorporator
