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EXHIBIT B
Registration Rights
The Shares (if common stock), or the common stock issuable upon
conversion of the Shares, shall be deemed "registrable securities" or otherwise
entitled to "piggy back" registration rights in accordance with the terms of
the agreement entered into by the Company with the purchasers of the Shares
relating to registration rights.
If no such agreement exists, then the Company and the Holder shall
enter into Holder's standard form of Registration Rights Agreement as in effect
on the Issue Date of the Warrant.
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EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
NEON SOFTWARE, INC.
ARTICLE ONE
The name of the corporation is :
NEON SOFTWARE, INC.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 0000 Xxxxxx Xxxx, Xxxx xx Xxxxxxxxx, Xxxxxx of New Castle 19805.
The name of its registered agent at such address is The Prentice Hall
Corporation System, Inc.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any and all lawful acts or activities for which corporations may
be organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
1. Authorized Shares The aggregate number of shares of capital
stock which the corporation has authority to issue is 41,352,367 shares,
comprised of (i) 26,000,000 shares of Common Stock, par value $.001 per share
(the "Common Stock"); and (ii) 9,169,028 shares of Series A Convertible
Preferred Stock, par value $.01 per share (the "Series A Preferred Stock") and
6,183,339 shares of Series B Convertible Preferred Stock, par value $.01 per
share (the "Series B Preferred Stock" and together with the Series A Preferred
Stock referred to herein as the "Preferred Stock.")
2. Voting
2A. General. Except as may be otherwise provided in
these terms of the Preferred Stock or by law, the holders of Preferred Stock
and Common Stock shall vote together with all other classes and series of stock
of the Corporation as a single class on all actions to be taken by the
stockholders of the Corporation, including, but not limited to actions amending
the Articles of Incorporation of the Corporation to increase the number of
authorized shares of Common Stock. Each holder of Preferred Stock shall be
entitled to one vote for each share of Common Stock (including fractions of a
share) which would be issuable to such holder upon the
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conversion of all the shares of Preferred Stock so held on the record date for
the determination of stockholders entitled to vote. Each holder of Common
Stock shall be entitled to one vote per share.
2B. Board Size. The Corporation shall not, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a single
class, reduce the number of directors constituting the Board of Directors to a
number less than five or increase the maximum number of directors constituting
the Board of Directors to a number in excess of seven.
2C. Board Seats. The holders of the Series A Preferred
Stock, voting as a separate series, shall be entitled to elect one director of
the Corporation. The holder of the Series B Preferred Stock, voting as a
separate series, shall be entitled to elect one director of the Corporation.
The holders of the Common Stock, voting as a separate class, shall be entitled
to elect the remaining directors of the Corporation. At any meeting (or in a
written consent in lieu thereof) held for the purpose of electing directors,
the presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Series A Preferred Stock then outstanding shall
constitute a quorum of Series A Preferred Stock for the election of the
director to be elected solely by the holders of Series A Preferred Stock; and
the presence in person or by proxy (or the written consent) of the holders of a
majority of the shares of Series B Preferred Stock then outstanding shall
constitute a quorum of Series B Preferred Stock for the election of the
director to be elected solely by the holders of Series B Preferred Stock. A
vacancy in the directorship elected by the holders of the Series A Preferred
Stock shall be filled only by vote or written consent of the holders of the
Series A Preferred Stock. A vacancy in the directorship elected by the holders
of Series B Preferred Stock shall be filled only by vote or written consent of
the holders of Series B Preferred Stock. A vacancy in any directorship elected
by the holders of the Common Stock shall be filled only by vote or written
consent of the holders of the Common Stock.
3. Dividends. The holders of the Preferred Stock shall be
entitled to receive, out of funds legally available therefor, dividends at the
same rate as dividends (other than dividends paid in additional shares of
Common Stock) are paid with respect to the Common Stock (treating each share of
Preferred Stock as being equal to the number of shares of Common Stock
(including fractions of a share) into which each share of Preferred Stock is
then convertible).
4. Liquidation.
4A. Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the shares of
Series B Preferred Stock shall be entitled, before any distribution or payment
is made upon any stock ranking on liquidation junior to the Series B Preferred
Stock, to be paid an amount equal to the greater of (i) $.3032342 per share (as
adjusted for stock splits, stock dividends and the like) plus, in the case of
each share, an amount equal to any dividends declared but unpaid thereon,
computed to the date payment thereof is made available, or (ii) such amount per
share as would have been payable had each such
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share been converted to Common Stock pursuant to paragraph 6 immediately prior
to such liquidation, dissolution or winding up, and the holders of Series B
Preferred Stock shall not be entitled to any further payment, such amount
payable with respect to one share of Series B Preferred Stock being sometimes
referred to as the "Series B Liquidation Payment" and with respect to all
shares of Series B Preferred Stock being sometimes referred to as the "Series B
Liquidation Payments." If upon such liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of Series B Preferred Stock shall be insufficient to permit
payment to the holders of Series B Preferred Stock of the amount distributable
as aforesaid, then the entire assets of the Corporation to be so distributed
shall be distributed ratably among the holders of Series B Preferred Stock.
Upon any such liquidation, dissolution or winding up of the Corporation, after
the holders of Series B Preferred Stock shall have been paid in full the
amounts to which they shall be entitled, the holders of the shares of Series A
Preferred Stock shall be entitled, before any distribution or payment is made
upon any stock ranking on liquidation junior to the Series A Preferred Stock,
to be paid an amount equal to the greater of (i) $.218 per share plus, (as
adjusted for stock split, stock dividends and the like) in the case of each
share, an amount equal to any dividends declared but unpaid thereon, computed
to the date payment thereof is made available, or (ii) such amount per share as
would have been payable had each such share been converted to Common Stock
pursuant to paragraph 6 immediately prior to such liquidation, dissolution or
winding up, and the holders of Series A Preferred Stock shall not be entitled
to any further payment, such amount payable with respect to one share of Series
A Preferred Stock being sometimes referred to as the "Series A Liquidation
Payment", with respect to all shares of Series A Preferred Stock being
sometimes referred to as the "Series A Liquidation Payments" and collectively
with the Series B Liquidation Payments, the "Liquidation Payments." If upon
such liquidation, dissolution or winding up of the Corporation, whether
voluntary or involuntary, the assets to be distributed among the holders of
Series A Preferred Stock shall be insufficient to permit payment to the holders
of Series A Preferred Stock of the amount distributable as aforesaid, then the
entire remaining assets of the Corporation to be so distributed shall be
distributed ratably among the holders of Series A Preferred Stock. Upon any
such liquidation, dissolution or winding up of the Corporation, after the
holders of Series A Preferred Stock shall have been paid in full the amounts to
which they shall be entitled, the remaining net assets of the Corporation may
be distributed to the holders of stock ranking on liquidation junior to the
Series A Preferred Stock. Written notice of such liquidation, dissolution or
winding up, stating a payment date, the amount of the Liquidation Payments and
the place where Liquidation Payments shall be payable, shall be delivered in
person, mailed by certified or registered mail, return receipt requested, or
sent by telecopier or telex, not less than 20 days prior to the payment date
stated therein, to the holders of record of Preferred Stock, such notice to be
addressed to each such holder at its address as shown by the records of the
Corporation.
4B. The consolidation or merger of the Corporation into
or with any other entity or entities which results in the exchange of
outstanding shares of the Corporation for securities or other consideration
issued or paid or caused to be issued or paid by any such entity or affiliate
thereof (other than (x) a merger to reincorporate the Corporation in a
different jurisdiction and (y) a merger in which the Corporation is the
surviving entity, that is, in which the Corporation's shareholders own or
control 50% or more of the surviving entity's voting shares),
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and the sale, lease, abandonment, transfer or other disposition by the
Corporation of all or substantially all its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
the provisions of this paragraph 4. For purposes of paragraph 4, the Common
Stock shall rank on liquidation junior to the Series A Preferred Stock and the
Series A Preferred Stock shall rank junior on liquidation to the Series B
Preferred Stock.
5. Restrictions. At any time when shares of Preferred Stock are
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Articles of Incorporation, and in addition to any other vote required by law or
the Articles of Incorporation, without the approval of the holders of a
majority of the then outstanding shares of Preferred Stock given in writing or
by vote at a meeting, consenting or voting (as the case may be) separately as a
series, the Corporation will not:
5A. Create or authorize the creation of any additional
class or series of shares of stock unless the same ranks junior to both series
of Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or increase the authorized amount
of Preferred Stock or increase the authorized amount of any additional class or
series of shares of stock unless the same ranks junior to both series of
Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize any
obligation or security convertible into shares of Preferred Stock or into
shares of any other class or series of stock unless the same ranks junior to
both series of Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Articles of Incorporation or by merger, consolidation or otherwise;
5B. Consent to any liquidation, dissolution or winding up
of the Corporation or consolidate or merge into or with any other entity or
entities or sell, lease, abandon, transfer or otherwise dispose of all or
substantially all its assets, provided, however, that this Section 5B does not
apply to mergers in which the Corporation is the surviving entity (that is, in
cases in which the Corporation's shareholders own or control 50% or more of the
surviving entity's voting shares);
5C. Amend, alter or repeal its Articles of Incorporation
or By-laws in a manner adversely and substantially affecting either series of
Preferred Stock.
5D. Purchase or set aside any sums for the purchase of,
or pay any dividend or make any distribution on, any shares of stock other than
Preferred Stock, except for dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock and except
for the purchase of shares of Common Stock from former employees of the
Corporation who acquired such shares directly from the Corporation, if each
such purchase is made pursuant to contractual rights held by the Corporation
relating to the termination of employment of such former employee and the
purchase price does not exceed the original issue price paid by such former
employee to the Corporation for such shares; or
5E. Redeem or otherwise acquire any shares of Preferred
Stock except pursuant to a purchase offer made pro rata to all holders of the
shares of Preferred Stock on the
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basis of the aggregate number of outstanding shares of Preferred Stock then
held by each such holder.
6. Conversions. The holders of shares of Preferred Stock shall
have the following conversion rights:
6A. Right to Convert. Subject to the terms and
conditions of this paragraph 6, the holder of any share or shares of Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Preferred Stock (except that upon any liquidation of the Corporation
the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amount distributable on Preferred Stock)
into such number of fully paid and nonassessable shares of Common Stock as is
obtained as follows:
(i) with respect to the Series A Preferred Stock, by
(a) multiplying the number of shares of Series A Preferred Stock so to
be converted by $.218 and (b) dividing the result by the Conversion
Price of $.218 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this paragraph 6,
then by the conversion price as last adjusted and in effect at the
date any share or shares of Series A Preferred Stock are surrendered
for conversion, and (ii) with respect to the Series B Preferred Stock,
by (a) multiplying the number of shares of Series B Preferred Stock so
to be converted by $.3032342 and (b) dividing the result by the
conversion price of $.3032342 per share or, in case an adjustment of
such price has taken place pursuant to the further provisions of this
paragraph 6, then by the conversion price as last adjusted and in
effect at the date any share or shares of Series B Preferred Stock are
surrendered for conversion. The respective prices at which the shares
of Series A Preferred Stock and the shares of Series B Preferred Stock
may be converted into shares of Common Stock, as adjusted in
accordance with this paragraph 6, are referred to herein as the
"Series A Conversion Price" and the "Series B Conversion Price";
respectively, and the term "Conversion Price" as used herein shall
refer to either the Series A Conversion Price or the Series B
Conversion Price, as the context shall require.
Such rights of conversion shall be exercised by the holder thereof by
giving written notice that the holder elects to convert a stated number of
shares of Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of Preferred
Stock) at any time during its usual business hours on the date set forth in
such notice, together with a statement of the name or names (with address) in
which the certificate or certificates for shares of Common Stock shall be
issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in subparagraph 6A
and surrender of the certificate or certificates for the share or shares of
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names
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as such holder may direct, a certificate or certificates for the number of
whole shares of Common Stock issuable upon the conversion of such share or
shares of Preferred Stock. To the extent permitted by law, such conversion
shall be deemed to have been effected and the Conversion Price shall be
determined as of the close of business on the date on which such written notice
shall have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at such
time the rights of the holder of such share or shares of Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Preferred Stock into
Common Stock and no payment or adjustment shall be made upon any conversion on
account of any cash dividends on the Common Stock issued upon such conversion.
At the time of each conversion, the Corporation shall pay in cash an amount
equal to all dividends, declared and unpaid on the shares of Preferred Stock
surrendered for conversion to the date upon which such conversion is deemed to
take place as provided in subparagraph 6B. In case the number of shares of
Preferred Stock represented by the certificate or certificates surrendered
pursuant to subparagraph 6A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates for the
number of shares of Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If any fractional
share of Common Stock would, except for the provisions of the first sentence of
this subparagraph 6C, be delivered upon such conversion, the Corporation, in
lieu of delivering such fractional share, shall pay to the holder surrendering
the Preferred Stock for conversion an amount in cash equal to the current
market price of such fractional share as determined in good faith by the Board
of Directors of the Corporation.
6D. Adjustment of Price Upon Issuance of Common Stock. Except as
provided in subparagraph 6E, if and whenever the Corporation shall issue or
sell, or is, in accordance with subparagraphs 6D(1) through 6D(7), deemed to
have issued or sold, any shares of Common Stock for a consideration per share
less than the Series A Conversion Price or Series B Conversion Price, as the
case may be (the "Applicable Conversion Price"), in effect immediately prior to
the time of such issue or sale, then, forthwith upon such issue or sale, the
Applicable Conversion Price shall be reduced to the price determined by
dividing (i) an amount equal to the sum of (a) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the
then existing Applicable Conversion Price and (b) the consideration, if any,
received by the Corporation upon such issue or sale, by (ii) the total number
of shares of Common Stock outstanding immediately after such issue or sale.
For purposes of this subparagraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any
time the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase,
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or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called "Options" and such
convertible or exchangeable stock or securities being called
"Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i)
the total amount, if any, received or receivable by the Corporation as
consideration for the granting of such Options, plus the minimum
aggregate amount of additional consideration payable to the
Corporation upon the exercise of all such Options, plus, in the case
of such Options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion
or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options) shall be less than the Applicable
Conversion Price in effect immediately prior to the time of the
granting of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed
to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible
Securities and thereafter shall be deemed to be outstanding. Except
as otherwise provided in subparagraph 6D(3), no adjustment of the
Conversion Price shall be made upon the actual issue of such Common
Stock or of such Convertible Securities upon exercise of such Options
or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case
the Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Applicable
Conversion Price in effect immediately prior to the time of such issue
or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per
share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a)
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except as otherwise provided in subparagraph 6D(3), no adjustment of
the Conversion Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible
Securities and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Conversion Price
have been or are to be made pursuant to other provisions of this
subparagraph 6D, no further adjustment of the Conversion Price shall
be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate.
Upon the happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in subparagraph
6D(1), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subparagraph 6D(1) or 6D(2), or the rate at which Convertible
Securities referred to in subparagraph 6D(1) or 6D(2) are convertible
into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Applicable
Conversion Price in effect at the time of such event shall forthwith
be readjusted to the Applicable 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, but only if as a result of such
adjustment the Applicable Conversion Price then in effect hereunder is
thereby reduced; and on the termination of any such Option or any such
right to convert or exchange such Convertible Securities, the
Applicable Conversion Price then in effect hereunder shall forthwith
be increased to the Applicable Conversion Price which would have been
in effect at the time of such termination had such Option or
Convertible Securities, to the extent outstanding immediately prior to
such termination, never been issued.
6D(4) Stock Dividends. In case the Corporation
shall declare a dividend or make any other distribution upon any stock
of the Corporation payable in Common Stock (except for dividends or
distributions upon the Common Stock), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares
of Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall
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be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Corporation, without
deduction of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any Options shall be issued in connection with the
issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options
shall be deemed to have been issued for such consideration as
determined in good faith by the Board of Directors of the Corporation.
6D(6) Record Date. In case the Corporation shall
take a record of the holders of its Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution payable
in Common Stock, Options or Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
6D(7) Treasury Shares. 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, and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this subparagraph 6D.
6E. Certain Issues of Common Stock Excepted. Anything
herein to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment of the Conversion Price in the case of the issuance from
and after the date of filing of these terms of the Series A Convertible
Preferred Stock of up to an aggregate of 3,927,629 shares (appropriately
adjusted to reflect the occurrence of any event described in subparagraph 6F)
of Common Stock to directors, officers, employees or consultants of the
Corporation in connection with their service as directors of the Corporation,
their employment by the Corporation or their retention as consultants by the
Corporation, or to suppliers and other parties as payment for goods or services
rendered to the Corporation, plus such number of shares of Common Stock which
are repurchased by the Corporation from such persons after such date pursuant
to contractual rights held by the Corporation and at repurchase prices not
exceeding the respective original purchase prices paid by such persons to the
Corporation therefor.
6F. Subdivision or Combination of Common Stock. In case
the Corporation shall at any time subdivide (by any stock split, stock dividend
or otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately
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increased. In the case of any such subdivision, no further adjustment shall be
made pursuant to subparagraph 6D(4) by reason thereof.
6G. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization or reclassification,
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion
of such share or shares of Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of
such Common Stock immediately theretofore receivable upon such conversion had
such reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests
of such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Applicable Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares of
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Series A Conversion Price or the
Series B Conversion Price, as the case may be, resulting from such adjustment,
setting forth in reasonable detail the method upon which such calculation is
based.
6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend
upon its Common Stock payable in cash or stock or make any other
distribution to the holders of its Common Stock;
(2) the Corporation shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of
stock of any class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into another entity
or entities, or a sale, lease, abandonment, transfer or other
disposition of all or substantially all its assets; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
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then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier
or telex, addressed to each holder of any shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation, (a) at least
20 days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the
foregoing clause (b) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may
be.
6J. Stock to be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance upon the conversion of Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Preferred Stock. The Corporation
covenants that all shares of Common Stock which shall be so issued shall be
duly and validly issued and fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it
will from time to time take all such action as may be requisite to assure that
the par value per share of the Common Stock is at all times equal to or less
than the Series A Conversion Price and the Series B Conversion Price in effect
at the time. The Corporation will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirement of any national
securities exchange upon which the Common Stock may be listed. The Corporation
will not take any action which results in any adjustment of the Conversion
Price if the total number of shares of Common Stock issued and issuable after
such action upon conversion of the Preferred Stock would exceed the total
number of shares of Common Stock then authorized by the Articles of
Incorporation.
6K. No Reissuance of Preferred Stock. Shares of
Preferred Stock which are converted into shares of Common Stock as provided
herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares
of Common Stock upon conversion of Preferred Stock shall be made without charge
to the holders thereof for any issuance tax in respect thereof, provided that
the Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Preferred Stock
which is being converted.
11
13
6M. Closing of Books. The Corporation will at no time
close its transfer books against the transfer of any Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion of
such Preferred Stock, except as may otherwise be required to comply with
applicable securities laws.
6N. Definition of Common Stock. As used in this
paragraph 6, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, par value $.001 per share, as constituted on the date
of filing of these terms of the Preferred Stock, and shall also include any
capital stock of any class of the Corporation thereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon
conversion of shares of Preferred Stock shall include only shares designated as
Common Stock of the Corporation on the date of filing of this instrument, or in
case of any reorganization or reclassification of the outstanding shares
thereof, the stock, securities or assets provided for in subparagraph 6G.
0X. Xxxxxxxxx Conversion. If at any time the Corporation
shall effect a firm commitment underwritten public offering of shares of Common
Stock in which (i) the aggregate price paid for such shares by the public shall
be at least $10,000,000 and (ii) the price paid by the public for such shares
be at least $1.50 per share (appropriately adjusted to reflect the occurrence
of any event described in subparagraph 6F), then effective upon the closing of
the sale of such shares by the Corporation pursuant to such public offering,
all outstanding shares of Preferred Stock shall automatically convert to shares
of Common Stock on the basis set forth in this paragraph 6. Holders of shares
of Preferred Stock so converted may deliver to the Corporation at its principal
office (or such other office or agency of the Corporation as the Corporation
may designate by notice in writing to such holders) during its usual business
hours, the certificate or certificates for the shares so converted. As
promptly as practicable thereafter, the Corporation shall issue and deliver to
such holder a certificate or certificates for the number of whole shares of
Common Stock to which such holder is entitled, together with any cash dividends
and payment in lieu of fractional shares to which such holder may be entitled
pursuant to subparagraph 6C. Until such time as a holder of shares of
Preferred Stock shall surrender his or its certificates therefor as provided
above, such certificates shall be deemed to represent the shares of Common
Stock to which such holder shall be entitled upon the surrender thereof.
ARTICLE FIVE
The name and mailing address of the Sole Incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Xxxx Xxxxxxxx Xxxx Xxxxxx & Xxxxxxxx P.C.
000 X. Xxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
12
14
ARTICLE SIX
The corporation shall have perpetual existence.
ARTICLE SEVEN
Meetings of stockholders may be held within or without the State of
Delaware, as the By-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
By-laws of the corporation. Election of directors need not be by written
ballot unless the By-laws of the corporation so provide.
ARTICLE EIGHT
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHT shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE NINE
Unless this Certificate of Incorporation is amended or repealed with
respect to this ARTICLE NINE or unless the By-laws of the corporation designate
otherwise, the corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware
ARTICLE TEN
The corporation reserves the right to mend, alter, change or repeal
any provision contained in this Certificate of Incorporation in the manner now
or hereafter prescribed herein and by the General Corporation Law of the State
of Delaware, and all rights conferred upon stockholders herein are granted
subject to this reservation.
13
15
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation
Law of the State of Delaware, under penalties of perjury do make this
Certificate, hereby declaring, certifying and acknowledging that this is my
true act and deed and the facts stated herein are true, and accordingly have
hereunto set my name as of this 27th day of December, 1995.
----------------------------------------
Xxxx Xxxxxxxx Xxxx, Sole Incorporator
14
16
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
OWNERSHIP, WHICH MERGES: "NEON SOFTWARE, INC." A ILLINOIS CORPORATION WITH AND
INTO "NEON SOFTWARE, INC." UNDER THE NAME OF "NEON SOFTWARE, INC." A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE,
AS RECEIVED AND FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF DECEMBER,
A.D. 1995 AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ XXXXXX X. XXXXX
[SEAL] -----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION: 7771277
2564986 8100M DATE: 12-28-95
950310858
00
XXXXX XX XXXXXXXX
XXXXXXXXX XX XXXXX
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/28/1995
950310858 - 2564986
CERTIFICATE OF OWNERSHIP AND MERGER
Merging
NEON SOFTWARE, INC.
An Illinois Corporation
With and Into
NEON SOFTWARE, INC.
A Delaware Corporation
* * * * * * *
(In Accordance with the Provisions of Section 253 of the General
Corporation Law of the State of Delaware.)
* * * * * * *
Neon Software, Inc. a corporation organized and existing under and by virtue of
the Illinois Business Corporation Act (the "Parent"), DOES HEREBY CERTIFY THAT:
FIRST: The Parent was duly incorporated on the 30th day of June 1993
in accordance with the Illinois Business Corporation Act, the provisions of
which permit a merger of a corporation of that jurisdiction with a corporation
of another jurisdiction.
SECOND: The Parent owns One Hundred percent (100%) of the issued and
outstanding shares of capital stock of Neon Software, Inc., a corporation
incorporated on the 27th day of December, 1995 in accordance with the General
Corporation Law of the State of Delaware (the "Subsidiary").
THIRD: Each of the Board of Directors of the Parent and the
shareholders of such Parent entitled to vote theron, duly adopted the following
resolutions, by unanimous written consents each dated as of the 2nd day of
December 1995, determining to merge itself with and into the Subsidiary:
(Resolutions Begin Here)
Merger With and Into Neon Software, Inc., a Delaware Corporation
WHEREAS, each of the Board of Directors and shareholders of the
Corporation previously approved and entered into that certain Series B
18
Convertible Preferred Stock Purchase Agreement, dated September 20,
1995, whereby Section 5.12 thereof provides for the reincorporation of
the Corporation in the State of Delaware, and
WHEREAS, the Board of Directors deems it advisable and in the
Corporation's best interest to merge the Corporation with and into Neon
Software, Inc., a Delaware Corporation and wholly-owned subsidiary of
the Corporation ("Neon Delaware"), solely for the purpose of instituting
a change of the state of incorporation of the Corporation from Illinois
to Delaware (the "Reincorporation Merger").
BE IT RESOLVED, that the Reincorporation Merger, including the
conversion of the Corporation's issued and outstanding shares into
shares of like kind and denominations of Neon Delaware, all in
accordance with the terms and provisions of each of the Certificate of
Ownership and Merger to be filed with the Secretary of State of Delaware
(the "Certificate of Ownership") and Articles of Merger, together with a
Plan of Merger (the "Articles") be, and hereby is, approved and adopted
in all respects.
FURTHER RESOLVED, that the Plan of Merger reflecting the terms
of the Reincorporation Merger as provided for in the preceding
resolution, but and between the Corporation and Neon Delaware (the "Plan
of Merger"), and the Corporation's performance of the obligations under
the Plan of Merger and any supplementary or ancillary documents or
agreements contemplated thereby, be, and hereby are, approved in all
respects.
FURTHER RESOLVED, that in accordance with the applicable
provisions of the Illinois Business Corporation Act, the matter of the
Reincorporation Merger, subject to the terms and provisions of the Plan
of Merger, be submitted to the shareholders of the Corporation entitled
to vote thereon for their consideration, approval and adoption thereof.
FURTHER RESOLVED, that upon the approval by the holders of the
issued and outstanding shares of the Corporation's capital stock
entitled to vote thereon, the Chief Executive Officer, President and
Secretary of the Corporation be, and each hereby is, authorized and
empowered to execute and deliver, the Certificate of Ownership and the
Articles each to be filed with the Secretaries of States, and to cause
the same to be filed accordingly, and to consummate the transactions
contemplated thereby including the Corporation's performance of its
obligations thereunder, all in the name and on behalf of the
Corporation.
FURTHER RESOLVED, that the Reincorporation Merger approved
herein may be amended or terminated and abandoned by the Board of
Directors of
2
19
the Corporation at any time prior to the filing of either the
Certificate of Ownership or the Articles with the respective Secretaries
of State without any further action of the Board of Directors of the
Corporation and as deemed necessary by the Chief Executive Officer and
President as evidenced by his actions.
FURTHER RESOLVED, that the Chief Executive Officer, President
and any other proper officers of the Corporation be, and each hereby is,
authorized and empowered to take all such further actions deemed
necessary in furtherance of this Reincorporation Merger including,
without limitation, to pay all related fees, which shall in such
acting officer's judgment be deemed necessary, proper or advisable in
order to fully carry out the intent and effectuate the purpose of this
and the other resolutions provided for herein, with such changes therein
and modifications thereto as each executing officer shall upon his
discretion approve, which approval shall conclusively evidenced by his
execution thereof.
FURTHER RESOLVED, that at the Effective Time (as that term is
defined in the Plan of Merger), of the Reincorporation Merger approved
herein, each certificate representing shares of capital stock issued and
outstanding in the Corporation immediately prior to the Reincorporation
Merger authorized herein, shall be automatically canceled and
extinguished without any action of the holders thereof, and further,
each share canceled shall be converted into and become a right to
receive shares of capital stock in Neon Delaware of like kind and
denominations.
FURTHER RESOLVED, that contemporaneously with the effectiveness
of the Reincorporation Merger approved herein, any proper officers of
Neon Delaware be, and each hereby is, authorized and empowered to do all
things necessary to settle the affairs of this Corporation, including,
without limitation, to execute and deliver any requisite federal or
local tax forms (including a Federal Form 996) in the name and on behalf
of the Corporation, all in furtherance of legally merging this
Corporation out of existence.
Further Actions
FURTHER RESOLVED, that the Chief Executive Officer, the
President, any Vice President, Secretary or Assistant Secretary and any
other proper officers of the Corporation be, and each hereby is,
authorized and empowered to take all such further action including,
without limitation, to arrange for and enter into supplemental
agreements, instruments, certificates or documents relating to the
Reincorporation Merger, each of the Certificate of Ownership and the
Articles and any transactions contemplated thereby or therein, and to
execute and deliver all such supplemental agreements, instruments,
certificates of documents in the name and on behalf of the Corporation,
which shall upon each such executing officer's sole discretion be
deemed necessary, proper or advisable in order to perform the
Corporation's obligations under or in connection with the aforementioned
3
20
documents and the transactions contemplated therein, and to carry out
fully the intent and effectuate the purposes of this and the foregoing
resolutions.
(End of Resolutions)
FOURTH: The Reincorporation Merger has been approved, adopted,
certified, executed and acknowledged by the Parent in accordance with the
applicable provisions of the Illinois Business Corporation Act, the laws under
which it was organized.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding,
this Reincorporation Merger may be amended or terminated and abandoned by the
Board of Directors of the Corporation at any time prior to the date of filing
this Certificate of Ownership and Merger with the Secretary of State of
Delaware.
SIXTH: The effective time of this Certificate of Ownership and Merger
and the Reincorporation Merger certified herein shall be December 31, 1995.
4
21
IN WITNESS WHEREOF, the undersigned, for the purpose of effectuating
the Reincorporation Merger of the Parent with and into the Subsidiary, pursuant
to the General Corporation Law of the State of Delaware, under penalties of
perjury does hereby declare and certify that this is the act and deed of the
Parent and the facts stated herein are true and accordingly have hereunto
signed this Certificate of Ownership and Merger as of this 2nd day of December,
1995.
Neon Software, Inc.
an Illinois Corporation
By: /s/ XXXXXX X. XXXX, XX.
----------------------------------
Xxxxxx X. Xxxx, Xx.
Its: Chief Executive Officer and President
5
22
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NEON SOFTWARE, INC." CHANGING ITS NAME FROM "NEON SOFTWARE, INC."
TO "NEW ERA OF NETWORKS, INC." FILED IN THIS OFFICE ON THE TWELFTH DAY OF
APRIL, A.D. 1996 AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ XXXXXX X. XXXXX
[SEAL] -----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION: 7905493
2564986 8100 DATE: 04-12-96
960105934
23
NEON SOFTWARE, INC.
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Adopted in Accordance with the Provisions of Section 242
of the General Corporation Law of the State of Delaware)
--------------------------------------------------------------------------------
Xxxxxx X. Xxxx, being the Chief Executive Officer and Secretary of Neon
Software, Inc. a corporation organized and existing under and by virtue of the
laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY as
follows:
FIRST: That the Corporation's Certificate of Incorporation (the "Certificate
of Incorporation") be, and hereby is, amended to reflect a change in the
Corporation's name from Neon Software, Inc. to New Era Of Networks, Inc. by
deleting Article One in its entirety and substituting in lieu thereof a new
Article One as hereinafter set forth:
"ARTICLE ONE
The name of the Corporation is:
New Era Of Networks, Inc."
SECOND: That the Board of Directors of the Corporation approved the foregoing
amendments by unanimous written consent in accordance with the provisions of
Sections 141(f) and 242 of the General Corporation Law of the State of Delaware
and directed that such amendments be submitted to the Stockholders of the
Corporation entitled to vote thereon form their consideration, approval and
adoption thereof.
THIRD: That the Stockholders of the Corporation entitled to vote thereon
approved the foregoing amendments by unanimous written consent in accordance
with the provisions of Sections 228(c) and 242 of the General Corporation Law
of the State of Delaware.
[SIGNATURE PAGE TO FOLLOW]
24
IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer and
Secretary hereinabove named, for the purpose of amending the Certificate of
Incorporation of the Corporation in accordance with the applicable provisions
of the General Corporation Law of the State of Delaware, under penalties of
perjury does hereby declare and certify that this is the act and deed of the
Corporation and that the facts stated herein are true, and accordingly have
hereunto signed this Certificate of Amendment of Certificate of Incorporation
as of this 1st day of March, 1996.
NEON SOFTWARE, INC.
By: /s/ XXXXXX X. XXXX, XX.
-----------------------------------
Xxxxxx X. Xxxx, Xx.
Its: Chief Executive Officer & Secretary
25
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "NEW ERA OF NETWORKS, INC.", FILED IN THIS OFFICE ON THE THIRD DAY
OF JUNE, A.D. 1996, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL]
/s/ XXXXXX X. XXXXX
[SEAL] -----------------------------------
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION: 7970281
2564986 8100 DATE: 06-03-96
960159993
26
NEW ERA OF NETWORKS, INC.
Certificate of Amendment of Certificate of Incorporation
(Adopted in Accordance with the Provisions of Section 242
of the General Corporation Law of the State of Delaware)
--------------------------------------------------------------------------------
Xxxxxx X. Xxxx, being the Chief Executive Officer and Secretary of New Era Of
Networks, Inc., a corporation organized and existing under and by virtue of
the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY as
follows:
FIRST: That the Corporation's Certificate of Incorporation (the
"Certificate of Incorporation") be, and hereby is, amended to (i) provide
for an increase in its authorized shares, inclusive of such is the
creation and designation of a new "Series C Convertible Preferred Stock,"
par value $.01 per share and (ii) restate the preferences, qualifications,
limitations, restrictions and special or relative rights of the
Corporation's Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, by deleting Article Four in its entirety and substituting
in lieu thereof a new Article Four, all as set forth on Exhibit A attached
hereto and made a part hereof.
SECOND: That the Board of Directors of the Corporation approved the
foregoing amendments by unanimous written consent in accordance with the
provisions of Sections 141(f) and 242 of the General Corporation Law of
the State of Delaware and directed that such amendments be submitted to
the Stockholders of the Corporation entitled to vote thereon for their
consideration, approval and adoption thereof.
THIRD: That the Stockholders of the Corporation entitled to vote
thereon approved the foregoing amendments by unanimous written consent in
accordance with the provisions of Sections 228(c) and 242 of the General
Corporation Law of the State of Delaware.
[SIGNATURE PAGE TO FOLLOW]
27
IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer and
Secretary hereinabove named, for the purpose of amending the Certificate of
Incorporation of the Corporation in accordance with the applicable provisions
of the General Corporation Law of the State of Delaware, under penalties of
perjury does hereby declare and certify that this is the act and deed of the
Corporation and that the facts stated herein are true, and accordingly have
hereunto signed this Certificate of Amendment of Certificate of Incorporation
as of this 28th day of May, 1996.
NEW ERA OF NETWORKS, INC.
By: /s/ XXXXXX X. XXXX, XX.
----------------------------
Xxxxxx X. Xxxx, Xx.
Its: Chief Executive Officer & Secretary
28
NEW ERA OF NETWORKS, INC.
EXHIBIT A TO CERTIFICATE OF AMENDMENT
--------------------------------------------------------------------------------
ARTICLE FOUR
1. Authorized Shares/Designations The aggregate number of
shares of capital stock which the corporation has authority to issue is
53,292,615 shares, comprised of (i) 33,275,652 shares of Common Stock, par
value $.001 per share (the "Common Stock"); and (ii) 9,169,028 shares of Series
A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock") and 6,183,339 shares of Series B Convertible Preferred Stock,
par value $.01 per share (the "Series B Preferred Stock" and 4,664,596 shares of
Series C Convertible Preferred Stock, par value $.01 per share (the "Series C
Preferred Stock); the Series A, Series B and Series C Preferred Stock are
sometimes collectively referred to herein as the "Preferred Stock")
2. Voting
2A. General. Except as may be otherwise provided in
these terms of the Preferred Stock or by law, the holders of Preferred Stock
and Common Stock shall vote together with all other classes and series of stock
of the Corporation as a single class on all actions to be taken by the
stockholders of the Corporation, including, but not limited to actions amending
the Articles of Incorporation of the Corporation to increase the number of
authorized shares of Common Stock. Each holder of Preferred Stock shall be
entitled to one vote for each share of Common Stock (including fractions of a
share) which would be issuable to such holder upon the conversion of all the
shares of Preferred Stock so held on the record date for the determination of
stockholders entitled to vote. Each holder of Common Stock shall be entitled
to one vote per share.
2B. Board Size. The Corporation shall not, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a single
class, reduce the number of directors constituting the Board of Directors to a
number less than five or increase the maximum number of directors constituting
the Board of Directors to a number in excess of seven.
2C. Board Seats. The holders of the Series A Preferred
Stock, voting as a separate series, shall be entitled to elect one director of
the Corporation. The holders of the Series B Preferred Stock, voting as a
separate series, shall be entitled to elect one director of the Corporation.
The holders of the Series C. Preferred Stock, voting as a separate series,
shall be entitled to elect one director of the Corporation. The holders of the
Common Stock, voting as a separate class, shall be entitled to elect the
remaining directors of the Corporation. At any meeting (or in a written
consent in lieu thereof) held for the purpose of electing directors, the
presence in person or by proxy (or the written consent) of the holders of a
majority of the shares
29
of Series A Preferred Stock then outstanding shall constitute a quorum of
Series A Preferred Stock for the election of the director to be elected solely
by the holders of Series A Preferred Stock; the presence in person or by
proxy (or the written consent) of the holders of a majority of the shares of
Series B Preferred Stock then outstanding shall constitute a quorum of Series B
Preferred Stock for the election of the director to be elected solely by the
holders of Series B Preferred Stock and the presence in person or by proxy (or
the written consent) of the holders of a majority of the shares of Series C
Preferred Stock then outstanding shall constitute a quorum of Series C
Preferred stock for the election of the director to be elected solely by the
holders of Series C Preferred Stock. A vacancy in the directorship elected by
the holders of the Series A Preferred Stock shall be filled only by vote or
written consent of the holders of the Series A Preferred Stock. A vacancy in
the directorship elected by the holders of Series B Preferred Stock shall be
filled only by vote or written consent of the holders of Series B Preferred
Stock. A vacancy in the directorship elected by the holders of Series C
Preferred Stock shall be filled only by vote or written consent of the holders
of Series C Preferred Stock. A vacancy in any directorship elected by the
holders of the Common Stock shall be filled only by vote or written consent of
the holders of the Common Stock.
3. Dividends. The holders of the Preferred Stock shall be
entitled to receive, out of funds legally available therefor, dividends at the
same rate as dividends (other than dividends paid in additional shares of
Common Stock) are paid with respect to the Common Stock (treating each share of
Preferred Stock as being equal to the number of shares of Common Stock
(including fractions of a share) into which each share of Preferred Stock is
then convertible).
4. Liquidation.
4A(1) Upon any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of the shares of
Series B Preferred Stock and Series C Preferred Stock shall together be
entitled, before any distribution or payment is made upon any stock ranking on
liquidation junior to the Series B Preferred Stock or the Series C Preferred
Stock, to be paid an amount equal to the greater of (i) $.3032342 per share in
the case of the Series B Preferred Stock and $1.61 per share in the case of the
Series C Preferred Stock (each as adjusted for stock splits, stock dividends
and the like) plus, in the case of each share, an amount equal to any dividends
declared but unpaid thereon, computed to the date payment thereof is made
available, or (ii) such amount per share as would have been payable had each
such share been converted to Common Stock pursuant to paragraph 6 immediately
prior to such liquidation, dissolution or winding up, and the holders of Series
B Preferred Stock and Series C Preferred Stock shall not be entitled to any
further payment, such amount payable with respect to one share of Series B
Preferred Stock being sometimes referred to as the "Series B Liquidation
Payment" and with respect to all shares of Series B Preferred Stock being
sometimes referred to as the "Series B Liquidation Payments" and such amount
payable with respect to one share of Series C Preferred Stock being sometimes
referred to as the "Series C Liquidation Payment" and with respect to all
shares of Series C Preferred Stock being sometimes referred to as the "Series C
Liquidation Payments." If upon such liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of Series B Preferred Stock and the holders of Series C
Preferred Stock shall be insufficient to permit
-2-
30
payment to such holders of the amount distributable
as aforesaid, then the entire assets of the Corporation to be so distributed
shall be distributed ratably among the holders of Series B Preferred Stock and
the holders of Series C Preferred Stock in the proportion that the value of the
Series B Preferred Stock and Series C Preferred Stock held by each such holder
bears to the total value of the series B Preferred Stock and Series C Preferred
Stock computed as follows:
(i) the value of the Series B Preferred Stock ("VB") held
by each Series B Preferred Shareholder shall equal the number of shares of
Series B Preferred Stock so held multiplied by $.3032342 (as adjusted for stock
splits, stock dividends and the like).
(ii) the value of the Series C Preferred Stock ("VC") held
by each Series C Preferred Shareholder shall equal the number of shares of
Series C Preferred Stock so held multiplied by $1.61 (as adjusted for stock
splits, stock dividends and the like).
(iii) the total value of the Series B Preferred Stock and
Series C Preferred Stock shall equal the sum of VB and VC for all holders of
Series B Preferred Stock and all holders of Series C Preferred Stock.
4A(2) Upon any such liquidation, dissolution or winding up
of the Corporation, after the holders of Series B Preferred Stock and the
holders of Series C Preferred stock shall have been paid in full the amounts to
which they shall be entitled, the holders of the shares of Series A Preferred
Stock shall be entitled, before any distribution or payment is made upon any
stock ranking on liquidation junior to the Series A Preferred Stock, to be paid
an amount equal to the greater of (i) $.218 per share plus, (as adjusted for
stock split, stock dividends and the like) in the case of each share, an amount
equal to any dividends declared but unpaid thereon, computed to the date
payment thereof is made available, or (ii) such amount per share as would have
been payable had each such share been converted to Common Stock pursuant to
paragraph 6 immediately prior to such liquidation, dissolution or winding up,
and the holders of Series A Preferred Stock shall not be entitled to any
further payment, such amount payable with respect to one share of Series A
Preferred Stock being sometimes referred to as the "Series A Liquidation
Payment," with respect to all shares of Series A Preferred Stock being
sometimes referred to as the "Series A Liquidation Payments," and collectively
with the Series B Liquidation Payments and the Series C Liquidation Payments,
the "Liquidation Payments." If upon such liquidation dissolution or winding up
of the Corporation, whether voluntary or involuntary, the assets to be
distributed among the holders of Series A Preferred Stock shall be insufficient
to permit payment to the holders of Series A Preferred Stock of the amount
distributable as aforesaid, then the entire remaining assets of the Corporation
to be so distributed shall be distributed ratably among the holders of Series A
Preferred Stock. Upon any such liquidation, dissolution or winding up of the
Corporation, after the holders of Series A Preferred Stock shall have been paid
in full the amounts to which they shall be entitled, the remaining net assets
of the Corporation may be distributed to the holders of stock ranking on
liquidation junior to the Series A Preferred Stock. Written notice of such
liquidation, dissolution or winding up, stating a payment date, the amount of
the Liquidation Payments and the place where Liquidation Payments shall be
payable, shall be delivered in person, mailed by certified or registered mail,
return receipt requested, or sent by telecopier or telex, not less than 20 days
prior to the payment date stated therein, to the holders of
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record of Preferred Stock, such notice to be addressed to each such holder at
its address as shown by the records of the Corporation.
4B. The consolidation or merger of the Corporation into
or with any other entity or entities which results in the exchange of
outstanding shares of the Corporation for securities or other consideration
issued or paid or caused to be issued or paid by any such entity or affiliate
thereof (other than (x) a merger to reincorporate the Corporation in a
different jurisdiction and (y) a merger in which the Corporation is the
surviving entity, that is, in which the Corporation's shareholders own or
control 50% or more of the surviving entity's voting shares), and the sale,
lease, abandonment, transfer or other disposition by the Corporation of all or
substantially all its assets, shall be deemed to be a liquidation, dissolution
or winding up of the Corporation within the meaning of the provisions of this
paragraph 4. For purposes of paragraph 4, the Common Stock shall rank on
liquidation junior to the Series A Preferred Stock; the Series A Preferred
Stock shall rank on liquidation junior to the Series B Preferred Stock and the
Series C Preferred Stock, and the Series B Preferred Stock shall rank on
liquidation in parity with the Series C Preferred Stock.
5. Restrictions. At any time when shares of Preferred Stock are
outstanding, except where the vote or written consent of the holders of a
greater number of shares of the Corporation is required by law or by the
Articles of Incorporation, and in addition to any other vote required by law or
the Articles of Incorporation, without the approval of the holders of a
majority of the then outstanding shares of Preferred Stock given in writing or
by vote at a meeting, consenting or voting (as the case may be) separately as a
series, the Corporation will not:
5A. Create or authorize the creation of any additional
class or series of shares of stock unless the same ranks junior to each and all
series of Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or increase the authorized amount
of Preferred Stock or increase the authorized amount of any additional class or
series of shares of stock unless the same ranks junior to each and all series
of Preferred Stock as to the distribution of assets on the liquidation,
dissolution or winding up of the Corporation, or create or authorize any
obligation or security convertible into shares of Preferred Stock or into
shares of any other class or series of stock unless the same ranks junior to
both series of Preferred Stock as to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, whether any such
creation, authorization or increase shall be by means of amendment to the
Articles of Incorporation or by merger, consolidation or otherwise;
5B. Consent to any liquidation, dissolution or winding up
of the Corporation or consolidate or merge into or with any other entity or
entities or sell, lease, abandon, transfer or otherwise dispose of all or
substantially all its assets, provided, however, that this Section 5B does not
apply to mergers in which the Corporation is the surviving entity (that is, in
cases in which the Corporation's shareholders own or control 50% or more of the
surviving entity's voting shares);
5C. Either (i) amend, alter or repeal its By-laws or (ii)
amend, alter or repeal its Articles of Incorporation or By-laws in manner
adversely and substantially affecting any series of Preferred Stock relative to
the other series of Preferred Stock; provided that, in the case of
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clause (ii), the holders of a majority of the then outstanding shares of such
series of Preferred Stock being so affected have previously approved such
amendment, alteration or repeal.
5D. Purchase or set aside any sums for the purchase of,
or pay any dividend or make any distribution on, any shares of stock other than
Preferred Stock, except for dividends or other distributions payable on the
Common Stock solely in the form of additional shares of Common Stock and except
for the purchase of shares of Common Stock from former employees of the
Corporation who acquired such shares directly from the Corporation, if each
such purchase is made pursuant to contractual rights held by the Corporation
relating to the termination of employment of such former employee and the
purchase price does not exceed the original issue price paid by such former
employee to the Corporation for such shares; or
5E. Redeem or otherwise acquire any shares of Preferred
Stock except pursuant to a purchase offer made pro rata to all holders of the
shares of Preferred Stock on the basis of the aggregate number of outstanding
shares of Preferred Stock then held by each such holder.
6. Conversions. The holders of shares of Preferred Stock shall
have the following conversion rights:
6A. Right to Convert. Subject to the terms and
conditions of this paragraph 6, the holder of any share or shares of Preferred
Stock shall have the right, at its option at any time, to convert any such
shares of Preferred Stock (except that upon any liquidation of the Corporation
the right of conversion shall terminate at the close of business on the
business day fixed for payment of the amount distributable on Preferred Stock)
into such number of fully paid and nonassessable shares of Common Stock as is
obtained as follows:
(i) with respect to the Series A Preferred Stock, by
(a) multiplying the number of shares of Series A Preferred Stock so to
be converted by $.218 and (b) dividing the result by the conversion
price of $.218 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this paragraph 6,
then by the conversion price as last adjusted and in effect at the
date any share or shares of Series A Preferred Stock are surrendered
for conversion, and
(ii) with respect to the Series B Preferred Stock, by
(a) multiplying the number of shares of Series B Preferred Stock so to
be converted by $.3032342 and (b) dividing the result by the
conversion price of $.3032342 per share or, in case an adjustment of
such price has taken place pursuant to the further provisions of this
paragraph 6, then by the conversion price as last adjusted and in
effect at the date any share or shares of Series B Preferred Stock are
surrendered for conversion; and
(iii) with respect to the Series C Preferred Stock,
by (a) multiplying the number of shares of Series C Preferred Stock so
to be converted by $1.61 and (b) dividing the result by the conversion
price of $1.61 per share or, in case an adjustment of such price has
taken place pursuant to the further provisions of this paragraph 6,
then by the
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conversion price as last adjusted and in effect at the date any share
or shares of Series C Preferred Stock are surrendered for conversion.
The respective prices at which the shares of Series A Preferred Stock and the
shares of Series B Preferred Stock and the Series C Preferred Stock may be
converted into shares of Common Stock, as adjusted in accordance with this
paragraph 6, are referred to herein as the "Series A Conversion Price," "Series
B Conversion Price" and the "Series C Conversion Price"; respectively, and the
term "Conversion Price" as used herein shall refer to either the Series A
Conversion Price, Series B Conversion Price or the Series C Conversion Price,
as the context shall require.
Such rights of conversion shall be exercised by the holder thereof by
giving written notice that the holder elects to convert a stated number of
shares of Preferred Stock into Common Stock and by surrender of a certificate
or certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of Preferred
Stock) at any time during its usual business hours on the date set forth in
such notice, together with a statement of the name or names (with address) in
which the certificate or certificates for shares of Common Stock shall be
issued.
6B. Issuance of Certificates; Time Conversion Effected.
Promptly after the receipt of the written notice referred to in subparagraph 6A
and surrender of the certificate or certificates for the share or shares of
Preferred Stock to be converted, the Corporation shall issue and deliver, or
cause to be issued and delivered, to the holder, registered in such name or
names as such holder may direct, a certificate or certificates for the number
of whole shares of Common Stock issuable upon the conversion of such share or
shares of Preferred Stock. To the extent permitted by law, such conversion
shall be deemed to have been effected and the Conversion Price shall be
determined as of the close of business on the date on which such written notice
shall have been received by the Corporation and the certificate or certificates
for such share or shares shall have been surrendered as aforesaid, and at such
time the rights of the holder of such share or shares of Preferred Stock shall
cease, and the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such conversion
shall be deemed to have become the holder or holders of record of the shares
represented thereby.
6C. Fractional Shares; Dividends; Partial Conversion. No
fractional shares shall be issued upon conversion of Preferred Stock into
Common Stock and no payment or adjustment shall be made upon any conversion on
account of any cash dividends on the Common Stock issued upon such conversion.
At the time of each conversion, the Corporation shall pay in cash an amount
equal to all dividends, declared and unpaid on the shares of Preferred Stock
surrendered for conversion to the date upon which such conversion is deemed to
take place as provided in subparagraph 6B. In case the number of shares of
Preferred Stock represented by the certificate or certificates surrendered
pursuant to subparagraph 6A exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates for the
number of shares of Preferred Stock represented by the certificate or
certificates surrendered which are not to be converted. If
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any fractional share of Common Stock would, except for the provisions of the
first sentence of this subparagraph 6C, be delivered upon such conversion, the
Corporation, in lieu of delivering such fractional share, shall pay to the
holder surrendering the Preferred Stock for conversion an amount in cash equal
to the current market price of such fractional share as determined in good
faith by the Board of Directors of the Corporation.
6D. Adjustment of Price Upon Issuance of Common Stock.
Except as provided in subparagraph 6E, if and whenever the Corporation shall
issue or sell, or is, in accordance with subparagraphs 6D(1) through 6D(7),
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Series A Conversion Price, Series B Conversion Price or
Series C Conversion Price, as the case may be (the "Applicable Conversion
Price"), in effect immediately prior to the time of such issue or sale, then,
forthwith upon such issue or sale, the Applicable Conversion Price shall be
reduced to the price determined by dividing (i) an amount equal to the sum of
(a) the number of shares of Common Stock outstanding immediately prior to such
issue or sale multiplied by the then existing Applicable Conversion Price and
(b) the consideration, if any, received by the Corporation upon such issue or
sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issue or sale.
For purposes of this subparagraph 6D, the following subparagraphs
6D(1) to 6D(7) shall also be applicable:
6D(1) Issuance of Rights or Options. In case at any
time the Corporation shall in any manner grant (whether directly or by
assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable
for Common Stock (such warrants, rights or options being called
"Options" and such convertible or exchangeable stock or securities
being called "Convertible Securities") whether or not such Options or
the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount, if any, received or receivable by the
Corporation as consideration for the granting of such Options, plus
the minimum aggregate amount of additional consideration payable to
the Corporation upon the exercise of all such Options, plus, in the
case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable
upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the
Applicable Conversion Price in effect immediately prior to the time of
the granting of such Options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed
to have been issued for such price per share as of the date of
granting of such Options or the
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issuance of such Convertible Securities and thereafter shall be deemed
to be outstanding. Except as otherwise provided in subparagraph
6D(3), no adjustment of the Conversion Price shall be made upon the
actual issue of such Common Stock or of such Convertible Securities
upon exercise of such Options or upon the actual issue of such Common
Stock upon conversion or exchange of such Convertible Securities.
6D(2) Issuance of Convertible Securities. In case
the Corporation shall in any manner issue (whether directly or by
assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or
exchange (determined by dividing (i) the total amount received or
receivable by the Corporation as consideration for the issue or sale
of such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation upon the
conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities) shall be less than the Applicable
Conversion Price in effect immediately prior to the time of such issue
or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per
share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided
that (a) except as otherwise provided in subparagraph 6D(3), no
adjustment of the Conversion Price shall be made upon the actual issue
of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) if any such issue or sale of such Convertible
Securities is made upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Conversion Price
have been or are to be made pursuant to other provisions of this
subparagraph 6D, no further adjustment of the Conversion Price shall
be made by reason of such issue or sale.
6D(3) Change in Option Price or Conversion Rate.
Upon the happening of any of the following events, namely, if the
purchase price provided for in any Option referred to in subparagraph
6D(1), the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
subparagraph 6D(1) or 6D(2), or the rate at which Convertible
Securities referred to in subparagraph 6D(1) or 6D(2) are convertible
into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Applicable
Conversion Price in effect at the time of such event shall forthwith
be readjusted to the Applicable 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, but only if as a result of such
adjustment the Applicable Conversion Price then in effect hereunder is
thereby reduced; and on the termination of any such Option or any such
right to convert or exchange such Convertible Securities, the
Applicable Conversion Price then in effect hereunder shall forthwith
be increased to the Applicable Conversion Price which would have been
in effect
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at the time of such termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such
termination, never been issued.
6D(4) Stock Dividends. In case the Corporation
shall declare a dividend or make any other distribution upon any stock
of the Corporation payable in Common Stock (except for dividends or
distributions upon the Common Stock), Options or Convertible
Securities, any Common Stock, Options or Convertible Securities, as
the case may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without consideration.
6D(5) Consideration for Stock. In case any shares
of Common Stock, Options or Convertible Securities shall be issued or
sold for cash, the consideration received therefor shall be deemed to
be the amount received by the Corporation therefor, without deduction
therefrom of any expenses incurred or any underwriting commissions or
concessions paid or allowed by the Corporation in connection
therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the
Corporation shall be deemed to be the fair value of such consideration
as determined in good faith by the Board of Directors of the
Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the
Corporation in connection therewith. In case any Options shall be
issued in connection with the issue and sale of other securities of
the Corporation, together comprising one integral transaction in which
no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of
the Corporation.
6D(6) Record Date. In case the Corporation shall
take a record of the holders of its Common Stock for the purpose of
entitling them (i) to receive a dividend or other distribution payable
in Common Stock, Options or Convertible Securities or (ii) to
subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
6D(7) Treasury Shares. 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, and the
disposition of any such shares shall be considered an issue or sale of
Common Stock for the purpose of this subparagraph 6D.
6E. Certain Issues of Common Stock Excepted. Anything
herein to the contrary notwithstanding, the Corporation shall not be required
to make any adjustment of the Conversion Price in the case of the issuance from
and after May 2, 1995 of up to an aggregate of 6,427,629 shares (appropriately
adjusted to reflect the occurrence of any event described in subparagraph 6F)
of Common Stock to directors, officers, employees or consultants of the
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Corporation in connection with their service as directors of the Corporation,
their employment by the Corporation or their retention as consultants by the
Corporation, or to suppliers and other parties as payment for goods or services
rendered to the Corporation, plus such number of shares of Common Stock which
are repurchased by the Corporation from such persons after such date pursuant
to contractual rights held by the Corporation and at repurchase prices not
exceeding the respective original purchase prices paid by such persons to the
Corporation therefor.
6F. Subdivision or Combination of Common Stock. In case
the Corporation shall at any time subdivide (by any stock split, stock dividend
or otherwise) its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
shall be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased. In the case of any such subdivision, no further
adjustment shall be made pursuant to subparagraph 6D(4) by reason thereof.
6G. Reorganization or Reclassification. If any capital
reorganization or reclassification of the capital stock of the Corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization or reclassification,
lawful and adequate provisions shall be made whereby each holder of a share or
shares of Preferred Stock shall thereupon have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon the conversion
of such share or shares of Preferred Stock, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for a number
of outstanding shares of such Common Stock equal to the number of shares of
such Common Stock immediately theretofore receivable upon such conversion had
such reorganization or reclassification not taken place, and in any such case
appropriate provisions shall be made with respect to the rights and interests
of such holder to the end that the provisions hereof (including without
limitation provisions for adjustments of the Applicable Conversion Price) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise of such
conversion rights.
6H. Notice of Adjustment. Upon any adjustment of the
Conversion Price, then and in each such case the Corporation shall give written
notice thereof, by delivery in person, certified or registered mail, return
receipt requested, telecopier or telex, addressed to each holder of shares of
Preferred Stock at the address of such holder as shown on the books of the
Corporation, which notice shall state the Series A Conversion Price, Series B
Conversion Price or the Series C Conversion Price, as the case may be,
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
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6I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend
upon its Common Stock payable in cash or stock or make any other
distribution to the holders of its Common Stock;
(2) the Corporation shall offer for subscription
pro rata to the holders of its Common Stock any additional shares of
stock of any class or other rights;
(3) there shall be any capital reorganization or
reclassification of the capital stock of the Corporation, or a
consolidation or merger of the Corporation with or into another entity
or entities, or a sale, lease, abandonment, transfer or other
disposition of all or substantially all its assets; or
(4) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by delivery
in person, certified or registered mail, return receipt requested, telecopier
or telex, addressed to each holder of any shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation, (a) at least
20 days' prior written notice of the date on which the books of the Corporation
shall close or a record shall be taken for such dividend, distribution or
subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding up, at least 20 days' prior written notice
of the date when the same shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto and such notice in accordance with the
foregoing clause (b) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding up, as the case may
be.
6J. Stock to be Reserved. The Corporation will at all
times reserve and keep available out of its authorized Common Stock, solely for
the purpose of issuance upon the conversion of Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Preferred Stock. The Corporation
covenants that all shares of Common Stock which shall be so issued shall be
duly and validly issued and fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, and, without
limiting the generality of the foregoing, the Corporation covenants that it
will from time to time take all such action as may be requisite to assure that
the par value per share of the Common Stock is at all times equal to or less
than the Series A Conversion Price and the Series B Conversion Price in effect
at the time. The Corporation will take all such action as may be necessary to
assure that all such shares of Common Stock may be so issued without violation
of any applicable law or regulation, or of any requirement of any national
securities exchange upon which the Common Stock may be listed. The Corporation
will not take any action which results in any adjustment of the Conversion
Price if the total number of shares of Common Stock issued and issuable after
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such action upon conversion of the Preferred Stock would exceed the total
number of shares of Common Stock then authorized by the Articles of
Incorporation.
6K. No Reissuance of Preferred Stock. Shares of
Preferred Stock which are converted into shares of Common Stock as provided
herein shall not be reissued.
6L. Issue Tax. The issuance of certificates for shares
of Common Stock upon conversion of Preferred Stock shall be made without charge
to the holders thereof for any issuance tax in respect thereof, provided that
the Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the Preferred Stock
which is being converted.
6M. Closing of Books. The Corporation will at no time
close its transfer books against the transfer of any Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion of
such Preferred Stock, except as may otherwise be required to comply with
applicable securities laws.
6N. Definition of Common Stock. As used in this
paragraph 6, the term "Common Stock" shall mean and include the Corporation's
authorized Common Stock, par value $.001 per share, as constituted on the date
of filing of these terms of the Preferred Stock, and shall also include any
capital stock of any class of the Corporation thereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Corporation; provided that the shares of Common Stock receivable upon
conversion of shares of Preferred Stock shall include only shares designated as
Common Stock of the Corporation on the date of filing of this instrument, or in
case of any reorganization or reclassification of the outstanding shares
thereof, the stock, securities or assets provided for in subparagraph 6G.
0X. Xxxxxxxxx Conversion. If at any time the Corporation
shall effect a firm commitment underwritten public offering of shares of Common
Stock in which (i) the aggregate price paid for such shares by the public shall
be at least $15,000,000 and (ii) the price paid by the public for such shares
be at least $3.22 per share (appropriately adjusted to reflect the occurrence
of any event described in subparagraph 6F), then effective upon the closing of
the sale of such shares by the Corporation pursuant to such public offering,
all outstanding shares of Preferred Stock shall automatically convert to shares
of Common Stock on the basis set forth in this paragraph 6. Holders of shares
of Preferred Stock so converted may deliver to the Corporation at its principal
office (or such other office or agency of the Corporation as the Corporation
may designate by notice in writing to such holders) during its usual business
hours, the certificate or certificates for the shares so converted. As
promptly as practicable thereafter, the Corporation shall issue and deliver to
such holder a certificate or certificates for the number of whole shares of
Common Stock to which such holder is entitled, together with any cash dividends
and payment in lieu of fractional shares to which such holder may be entitled
pursuant to subparagraph 6C. Until such time as a holder of shares of
Preferred Stock shall surrender his or
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its certificates therefor as provided above, such certificates shall be deemed
to represent the shares of Common Stock to which such holder shall be entitled
upon the surrender thereof.
7. Right of Participation. The Corporation shall, prior to any
proposed issuance by the Corporation of any of its securities (other than debt
securities with no equity feature), offer to each Preferred Stockholder by
written notice the right, for a period of thirty (30) days, to purchase for
cash at an amount equal to the price or other consideration for which such
securities are to be issued, a number of such securities so that, after giving
effect to such issuance (and the conversion, exercise and exchange into or for
(whether directly or indirectly) shares of Common Stock of all such securities
that are so convertible, exercisable or exchangeable), such Preferred
Stockholder will continue to maintain its same proportionate equity ownership
in the Corporation as of the date of such notice (treating each Preferred
Stockholder, for the purpose of such computation, as the holder of the number
of shares of Common Stock which would be issuable to such Preferred Stockholder
upon conversion, exercise and exchange of all securities (including but not
limited to the Preferred Shares) held by such Preferred Stockholder on the date
such offer is made, that are convertible, exercisable or exchangeable into or
for (whether directly or indirectly) shares of Common Stock and assuming the
like conversion, exercise and exchange of all such other securities held by
other persons); provided, however, that the participation rights of the
Preferred Stockholder pursuant to this Section shall not apply to securities
issued (A) upon conversion of any of the Preferred Shares, (B) as a stock
dividend or upon any subdivision of shares of Common Stock, provided that the
securities issued pursuant to such stock dividend or subdivision are limited to
additional shares of Common Stock, (C) pursuant to subscriptions, warrants,
options, convertible securities, or other rights outstanding as of the date of
the filing of these Preferred Stock Terms (D) solely in consideration for the
acquisition (whether by merger or otherwise) by the Corporation or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity, (E) pursuant to a firm commitment public offering, (F) pursuant to the
exercise of options to purchase Common Stock granted to directors, officers,
employees or consultants of the Corporation in connection with their service to
the Corporation, or to suppliers or other parties as payment for goods or
services rendered to the Corporation, not to exceed in the aggregate 6,427,629
shares (appropriately adjusted to reflect stock splits, stock dividends,
combinations of shares and the like with respect to the Common Stock) less the
number of shares (as so adjusted) issued pursuant to subscriptions, warrants,
options, convertible securities, or other rights outstanding as of the date of
the filing of these Preferred Stock Terms Pursuant to clause (C) above (the
shares exempted by this clause (F) being hereinafter referred to as the
"Reserved Employee Shares"), and (G) upon the exercise of any right which was
not itself in violation of the terms of this Section. The Corporation's
written notice to the Preferred Stockholders shall describe the securities
proposed to be issued by the Corporation and specify the number, price and
payment terms. Each Preferred Stockholder may accept the Corporation's offer
as to the full number of securities offered to it or any lesser number, by
written notice thereof given by it to the Corporation prior to the expiration
of the aforesaid thirty (30) day period, in which event the Corporation shall
promptly sell and such Preferred Stockholder shall buy, upon the terms
specified, the number of securities agreed to be purchased by such Preferred
Stockholder. The Corporation shall be free at any time prior to ninety (90)
days after the date of its notice of offer to the Preferred Stockholders, to
offer and sell to any third party or parties the remainder of such securities
proposed to be issued by the Corporation (including but not limited
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to the securities not agreed by the Preferred Stockholders to be purchased by
them, at a price and on payment terms no less favorable to the Corporation than
those specified in such notice of offer to the Preferred Stockholders.
However, if such third party sale or sales are not consummated within such
ninety (90) day period, the Corporation shall not sell such securities as shall
not have been purchased within such period without again complying with this
Section.
[END OF ARTICLE FOUR]
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