EXHIBIT 10.8
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the 26th day of September 1997, by and
between GenVec, Inc., a Delaware corporation with its principal place of
business at 00000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the "Company"), and
FUSO Pharmaceutical Industries, Ltd., a corporation organized under the laws of
Japan, with its principal place of business at 3-11, 2-Chome, Xxxxxxxxxx, Xxxx-
xx, Xxxxx 000, Xxxxx and its registered head office at 7-10 1-Chome, Xxxxxxxxxx,
Xxxx-xx, Xxxxx 000, Xxxxx (the "Investor"), with reference to the following
recitals:
WHEREAS, the Company was incorporated on December 7, 1992, under the laws
of the State of Delaware;
WHEREAS, the Company and the Investor have entered into a Collaboration
Agreement, dated as of the date hereof and a Commercialization Agreement, dated
as of the date hereof (the "Collaboration and Commercialization Agreements"),
pursuant to which the Company has granted to the Investor a license to certain
intellectual property described in the Collaboration and Commercialization
Agreements for the uses described in the Collaboration and Commercialization
Agreements and the Company and the Investor have agreed to collaborate to
conduct research and develop certain gene therapy products for the treatment of
human cancer (the "Collaboration"); and
WHEREAS, the Investor desires to purchase certain of the shares of the
capital stock of the Company on the terms hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements, undertakings and
covenants set forth in this Agreement, and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Terms of Sale. Subject to the terms and conditions of this Section 1,
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the Company will issue and sell to the Investor, and the Investor will purchase
from the Company, 444,445 shares of the Company's Class E Convertible Preferred
Stock, par value $.01 per share (the "Shares"), for an aggregate purchase price
of one million one and 25/100 U.S. dollars ($1,000,001.25). On or before the
fourteenth (14th) business day after the date hereof, the Investor will deliver
to the Company a certified bank check, payable to the order of the Company, or a
wire transfer of immediately available funds, in an amount of one million one
and 25/100 U.S. dollars ($1,000,001.25) in payment for the Shares. Upon receipt
of such payment by the Company on a business day, subject to receipt of
stockholder approval ("Stockholder Approval") of the Company's Restated
Certificate of Incorporation attached hereto as Exhibit A (the "Restated
---------
Certificate"), the Investor will be deemed to be the holder of record of the
Shares and the Company will promptly execute a certificate evidencing issuance
to the Investor of the appropriate number of fully-paid and non-assessable
Shares.
2. Representations and Warranties of the Company. The Company hereby
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represents and warrants that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The Company has all necessary corporate power to enter into this
Agreement, and, subject to receipt of Stockholder Approval, to issue and deliver
the Shares hereunder and to carry out all of the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby, including,
without limitation, the issuance of the Shares, will, subject to receipt of
Stockholder Approval, be duly authorized by all requisite corporate action on
the part of the Company. This Agreement constitutes a valid and binding
instrument of the Company, enforceable in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Upon receipt of Stockholder Approval, the Company's authorized
capital stock will consist of (i) 52,005,095 shares of Common Stock, par value
$.01 per share, 5,687,473 of which are outstanding; (ii) 1,334,000 shares of
Class A Convertible Preferred Stock, par value $.01 per share, 1,334,000 of
which are outstanding; (iii) 11,800,468 shares of Class B Convertible Preferred
Stock, par value $.01 per share, 11,320,314 of which are outstanding; (iv)
21,065,000 shares of Class C Convertible Preferred Stock, par value $.01 per
share, 21,065,000 of which are outstanding; (v) 2,000,000 shares of Class D
Convertible Preferred Stock, par value $.01 per share, 571,429 of which are
outstanding and (vi) 444,445 shares of Class E Convertible Preferred Stock, par
value $.01 per share, none of which are outstanding. All outstanding shares of
capital stock are, and the Shares, when issued in accordance with or as
contemplated by the terms of this Agreement, will be, validly issued and
outstanding, fully paid and non-assessable. The shares of Common Stock issuable
upon conversion of the Shares are duly and validly authorized and reserved for
issuance. Each share of Class E Convertible Preferred Stock will be convertible
into a share or shares of Common Stock, at the rate, and otherwise has the
designations, preferences, limitations and rights, provided for in Article NINTH
of the Restated Certificate.
(d) The Company has made available to the Investor the Company's
audited financial statements for its most recent fiscal year and unaudited
financial statements for its most recent interim period, in each case, to the
extent available. As of the date of this Agreement, the financial statements
provided are attached hereto as Exhibit B. The annual statements have been
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prepared in a manner consistent with generally accepted accounting principles in
the United States ("GAAP") and the interim financial statements have been
prepared in a manner consistent with the annual financial statements (subject to
normal year-end audit adjustments and the omission of footnotes required by
GAAP).
(e) The Company has no liabilities, except: (i) as disclosed or
reflected in the financial statements attached hereto as Exhibit B; (ii)
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liabilities not in excess of two hundred fifty thousand U.S. dollars
($250,000.00); or (iii) as disclosed on Exhibit C.
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(f) To the Company's knowledge, there are neither any pending nor
threatened suits, legal proceedings, claims or governmental investigations
against or with respect to the Company or its properties or assets nor any basis
for any such suit, legal proceedings, claim or governmental investigation.
3. Representations and Warranties of the Investor. The Investor hereby
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represents and warrants that:
(a) The Investor is acquiring the Shares for purposes of investment
for its own account and not with a view to, or for resale in connection with,
the distribution thereof, as those terms are used in the Securities Act of 1933,
as amended (the "Securities Act"), and the rules and regulations promulgated
thereunder. The Investor has been advised and acknowledges that it will not be
able to dispose of the Shares, or any interest therein, without first complying
with the relevant provisions of the Securities Act and any applicable state
laws. The Investor also understands that the provisions of Rule 144 promulgated
under the Securities Act, permitting routine sales of securities of certain
issuers subject to the terms and conditions thereof, are not currently available
to it with respect to the Shares. The Investor acknowledges that the Company is
under no obligation to register the Shares or to take any action to assist the
Investor in complying with terms and conditions of any exemption that might be
available under the Securities Act or any state securities laws with respect to
sales of the Shares by the Investor in the future.
(b) The Investor has all corporate power to enter into this Agreement
and to carry out all of the transactions contemplated hereby. The execution,
delivery and performance of this Agreement by the Investor and the consummation
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of the Investor. This Agreement
constitutes a valid and binding instrument of the Investor, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(c) The Investor is an "accredited investor," as that term is defined
in Rule 501 promulgated under the Securities Act.
(d) The Investor either is (i) not an "Investment Company," as that
term is defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), or (ii) excluded from the definition of an Investment
Company under Section 3(c)(1) of the Investment Company Act.
(e) The Investor acknowledges that the representations, agreements and
acknowledgments set forth above are being given by the Investor with the
understanding that they will be relied on by the Company and its Board of
Directors to claim the availability of the exemption from the registration
provisions of the Securities Act contained in Regulation D promulgated
thereunder.
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(f) The Investor believes that it has received all the information it
considers necessary or appropriate for deciding whether to purchase the Shares.
In addition, it has had an opportunity to discuss the Company's business,
management, and financial affairs with the Company's management and to review
the Company's facilities. It has had an opportunity to ask questions of
officers of the Company, which questions were answered to the Investor's
satisfaction. It understands that its discussions, as well as the written
information given to it by the Company, were intended to describe the aspects of
the Company's business and prospects which the Company believes to be material,
but were not necessarily a thorough or exhaustive description. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 hereof or the right of the Investor to rely thereon.
4. Covenants of the Company. The Company hereby covenants that, so long
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as (i) the Investor owns any shares of the Company's Class E Convertible
Preferred Stock or shares of Common Stock into which such shares of Class E
Convertible Preferred Stock have been converted and (ii) the Company has not
consummated an underwritten public offering of Common Stock pursuant to one or
more registration statements filed under the Securities Act (or any successor
statute), the Company shall furnish to the Investor the financial statements and
reports described in (a) and (b) of this section, such annual financial
statements to be prepared in accordance with generally accepted accounting
principles in the United States consistently applied (except as may be noted
therein) and such interim financial statements to be prepared in a manner
consistent with the annual financial statements (subject to normal year-end
audit adjustments and the omission of footnotes), certified by the Company's
chief executive or financial officer:
(a) As soon as available, and in any event within 120 days after the
end of each fiscal year of the Company, a balance sheet of the Company as of the
end of such fiscal year and related statements of operations, stockholders'
equity and cash flows for such fiscal year, all in reasonable detail and setting
forth in comparative form the figures as of the end of and for the previous
fiscal year, which financial statements shall have been audited and shall be
accompanied by an opinion addressed to the Company from independent auditors;
and
(b) As soon as available, and in any event within 60 days after the
end of each fiscal quarter of the Company, an unaudited balance sheet and
unaudited statements of operations and cash flows.
5. Covenants of the Investor.
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(a) The Investor agrees that it will not sell, assign, pledge,
hypothecate, encumber or in any other manner transfer or dispose (a "Transfer")
of the Shares or any shares of Common Stock into which such Shares have been
converted (collectively, the "Securities") during the Research Program Term (as
defined in the Collaboration Agreement), without express written consent from
the Company.
(b) Before any Securities held by the Investor may be sold or
otherwise transferred (including transfer by gift or operation of law), the
Company shall have a right of first
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refusal to purchase the Securities on the terms and conditions set forth in this
Section 5(b) (the "Right of First Refusal").
(i) Notice of Proposed Transfer. The Investor shall deliver to
---------------------------
the Company a written notice (the "Notice") stating: (A) the Investor's bona
fide intention to sell or otherwise transfer such Securities; (B) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (C) the
number of Securities to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Investor proposes to
transfer the Securities (the "Offered Price"), and the Investor shall offer the
Securities at the Offered Price to the Company.
(ii) Exercise of Right of First Refusal. At any time within
----------------------------------
thirty (30) days after receipt of the Notice, the Company may, by giving written
notice to the Investor, elect to purchase all, but not less than all, of the
Securities proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection
(b)(iii) below.
(iii) Purchase Price. The purchase price ("Purchase Price") for
--------------
the Securities purchased by the Company under this Section 5(b) shall be the
Offered Price. If the Offered Price includes consideration other than cash, the
cash equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith.
(iv) Payment. Payment of the Purchase Price shall be made in
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cash (by certified bank check, payable to the order of the Investor, or wire
transfer of immediately available funds) within thirty (30) days after receipt
of the Notice or in the manner and at the times set forth in the Notice.
(v) Holder of Company Securities' Right to Transfer. If all of
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the Securities proposed in the Notice to be transferred to a given Proposed
Transferee are not purchased by the Company as provided in this Section 5(b),
then the Investor may sell or otherwise transfer such Securities to the Proposed
Transferee at the Offered Price or at a higher price, provided that (i) such
sale or other transfer is consummated within ninety (90) days after the date of
the Notice; (ii) any such sale or other transfer is effected in accordance with
any applicable securities laws; and (iii) the Proposed Transferee agrees in
writing to be bound by the obligations of the Investor set forth in this
Agreement. If the Securities described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company shall again be offered the Right of First Refusal
before any Securities held by the Investor may be sold or otherwise transferred.
(vi) Termination of Right of First Refusal. The Right of First
-------------------------------------
Refusal shall terminate upon an initial underwritten public offering of the
Company's securities.
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(c) The Investor agrees to hold the Securities subject to all
applicable provisions of the Securities Act, the Restated Certificate and the
Amended and Restated Bylaws of the Company and this Agreement.
(d) The Investor shall give the Company prompt written notice of any
proposed disposition of the Securities and shall not proceed with any such
proposed disposition without the express written consent required by paragraph
(a) of this Section 5 and unless a registration statement under the Securities
Act is in effect with respect to the Securities and any applicable state
securities laws have been complied with or unless the Company shall have
received an opinion of counsel, satisfactory to the Company, to the effect that
such registration is not required. In addition, the Investor agrees the
certificates representing the Securities issued to it pursuant hereto may bear
the following or similar legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT
OF FIRST REFUSAL AND A CONTRACTUAL LIMITATION ON THEIR
ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE, TRANSFER OR OTHER
DISPOSITION DESCRIBED IN THE STOCK PURCHASE AGREEMENT DATED
SEPTEMBER 25, 1997. IN ADDITION, THE SHARES HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE. NEITHER THE SHARES NOR ANY INTEREST OR
PARTICIPATION IN THE SHARES MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR
DISPOSED OF THE IN ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SHARES UNDER THE SECURITIES ACT, UNLESS, IN THE OPINION
(WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION) OF COUNSEL SATISFACTORY TO THE CORPORATION, SUCH
REGISTRATION IS NOT REQUIRED.
(e) The Investor agrees not to disclose to third parties any
confidential or proprietary information concerning the Company which is
furnished to the Investor by the Company except as required by law or legal
process. the term "confidential information" does not include information which
(i) was or becomes generally available to the public other than as a result of a
disclosure by such Investor, or (ii) was or becomes available to such Investor
on a non-confidential basis from a source other than the Company, provided that
such source is not bound by a confidentiality agreement with the Company.
(f) The Investor agrees in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any securities of the Company (other than those securities included in the
registration) without the prior written consent of the Investor or the
underwriters managing such initial underwritten public offering of the Company's
securities (the "Managing Underwriter") for one hundred eighty (180) days, or
such longer period of time as may be
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requested by the Managing Underwriter, from the effective date of such
registration, and (2) further agrees to execute any agreement reflecting (1)
above as may be requested by the Managing Underwriter. The Investor shall cause
any proposed purchaser, assignee, transferee or pledgee of any shares held by
the Investor to agree to take and hold such securities subject to this Section
5(f).
(g) The Investor agrees that it will not, directly or indirectly,
acquire, offer to acquire, agree to acquire, become the beneficial owner of or
obtain any rights in respect of any capital stock of the Company, by purchase or
otherwise, except as contemplated by this Agreement or as otherwise expressly
agreed to in writing by the Company.
6. Opinion of Counsel. On or before September 25, 1997, the Company's
------------------
counsel will deliver to the Investor an opinion, in form and substance
reasonably satisfactory to the Investor, that the Shares, when sold and
delivered in accordance with this Agreement, will be duly authorized, validly
issued and outstanding, fully paid and non-assessable.
7. Miscellaneous
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(a) Amendments and Waivers. This Agreement and any provision hereof
----------------------
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party (or any predecessor in interest thereof) against
which enforcement of the same is sought, provided, however, a change, waiver,
discharge or termination signed by a majority of the holders of the Securities
shall be deemed to be binding on all holders of Securities at the time
outstanding and each future holder of such Securities.
(b) Successors and Assigns. This Agreement will be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company and the
successors and permitted assigns of the Investor.
(c) Transferability. The Investor may not transfer or assign this
---------------
Agreement, or any of the rights or obligations hereunder, unless it is
transferred or assigned to the purchaser of all of the outstanding capital stock
or all or substantially all of the assets of the Investor, including every right
and interest the Investor may have in the Collaboration Agreement. The Investor
further agrees that prior to any transfer of this Agreement, consistent with
this Section, or any transfer of the Securities, the Investor shall comply with
all provisions of Section 5 of this Agreement.
(d) Law Governing. This Agreement will be governed by, and construed
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and enforced in accordance with, the internal laws of the State of Delaware.
(e) Notices. Unless otherwise provided, all notices, requests,
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demands and other communications required or permitted under this Agreement will
be in writing and will be deemed to have been duly made and received: (i) upon
personal delivery or confirmed facsimile to the party to be notified; (ii) seven
(7) business days after deposit with the Unites States Post Office, by
registered or certified mail or by first class mail, postage prepaid, addressed
as set forth below (or Japanese equivalent of the foregoing); or (iii) two (2)
business days after deposit with Federal Express or
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another reputable overnight courier (for two business day delivery), shipping
prepaid, addressed as set forth below:
(i) if to the Company, then to:
GenVec, Inc.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: President
with a copy to:
Attn: Chief Financial Officer
(ii) If to the Investor, then to:
FUSO Pharmaceutical Industries, Ltd.
3-11, 2-Chome Xxxxxxxxxx, Xxxx-xx
Xxxxx 000, Xxxxx
Attn: President
with a copy to:
Attn: Chief Financial Officer
Either party may change the address to which communications are to be sent by
giving five (5) business days' advance notice of such change of address to the
other party in conformity with the provisions of this Section.
(f) Headings. The headings in this Agreement are for purposes of
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reference only and will not affect the meaning or construction or any of the
provisions hereof.
(g) Execution; Counterparts. This Agreement may be executed in any
-----------------------
number of counterparts, each of which will be deemed to be an original as
against any party whose signature appears on such counterpart, and all of which
will together constitute one and the same instrument. This Agreement will become
binding when one or more counterparts of this Agreement, individually or taken
together, bear the signatures of all of the parties to this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
as of the date first above written.
FUSO Pharmaceuticals Industries, Ltd.
By:______________________________________
Xxxxx Xxxx
President
GenVec, Inc.
By:______________________________________
Xxxx X. Xxxxxxx, Ph.D.
President and Chief Executive Officer
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Exhibit A
State of Delaware
Office of the Secretary of State PAGE 1
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 RESTATED CERTIFICATE OF
"GENVEC, INC.", FILED IN THIS OFFICE ON THE TWENTY-SIXTH DAY OF JUNE, A.D. 1996,
AT 9:05 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
RESTATED CERTIFICATE OF INCORPORATION
OF
GENVEC, INC.
The undersigned, Xxxxxx X. X'Xxxxxx, President of GenVec, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. The present name of the Corporation is GenVec, Inc.
2. The original Certificate of Incorporation of the Corporation was filed
in the Office of the Secretary of State of the State of Delaware on December 7,
1992.
3. This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Section 245 of the Delaware General
Corporation Law, the Board of Directors having duly adopted resolutions
declaring advisable this Restated Certificate of Incorporation.
4. This Restated Certificate of Incorporation is being filed pursuant to
Section 245 of the Delaware General Corporation Law in order to restate and
integrate the Certificate of Incorporation of the Corporation. This Restated
Certificate of Incorporation does not further amend the provisions of the
Certificate of Incorporation of the Corporation as amended previously, and there
is no discrepancy between those provisions and the provisions of this Restated
Certificate of Incorporation.
5. The Certificate of Incorporation of the Corporation is hereby restated
in its entirety as follows:
RESTATED CERTIFICATE OF INCORPORATION
OF GENVEC, INC.
FIRST: The name of the Corporation is:
GENVEC, INC.
SECOND: The address of its registered office in the State of Delaware
is: Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000. The name of its registered agent at such address is:
THE CORPORATION TRUST COMPANY.
THIRD: The nature of the business or purposes to be conducted or promoted
is:
To have unlimited power to engage in any lawful act or activity for
which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The name and mailing address of the incorporator is as follows:
Name Address
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Xxxxxxx X. Xxxxx 12th Floor Packard Building
00xx xxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
FIFTH: In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the Bylaws of the Corporation.
SIXTH: Elections of directors need not be by written ballot unless the
Bylaws of the Corporation shall so provide.
SEVENTH:
A. Elimination of Certain Liabilities of Directors. A director of the
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Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided, however, that this shall not exempt a director from liability: (i) for
-----------------
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, or (iv) for any
transaction from which a director derived an improper personal benefit. If the
Delaware General Corporation Law is hereafter amended to authorize the further
elimination or limitation of liability of directors, then the liability of a
director of the Corporation, in addition to the limitation on personal
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liability provided herein, shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal of modification.
B. Indemnification and Insurance.
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(1) Right to Indemnification. Each person who was or is made a party
------------------------
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, the rights of
indemnification provided hereby shall continue as theretofore notwithstanding
such amendment unless such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors, administrators and personal
representatives; provided, however, that, except as provided in Section (B)(2)
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of this Article, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) authorized by
the board of directors of the Corporation.
The right to indemnification conferred in this section shall be a
contract right and shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided however, that, if the Delaware General Corporation Law
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requires, the payment of such expenses incurred by a director or officer in his
or her capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this section or
otherwise. The Corporation may, by action of its board of directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
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(2) Right of Claimant to Bring Suit. A claimant may bring suit
-------------------------------
against the Corporation under Section (B)(1) of this Article only if the
Corporation fails to pay in full within thirty days of its receipt of a written
claim for payment hereunder. If successful in whole or in part, the claimant
shall be entitled to be paid also the expense of prosecuting such claim
(including, but not limited to, attorneys' fees. It shall be a defense to any
such action (other than an action brought to enforce a claim for expenses
incurred in defending an any proceeding in advance of its final disposition
where the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct that make it
permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of providing such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
(3) Non-Exclusivity of Rights. The right to indemnification and the
-------------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section shall not be exclusive of any other right
that any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
(4) Insurance. The Corporation may maintain insurance, at its
---------
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
C. Amendment. Notwithstanding the provisions of this Certificate of
---------
Incorporation and any provisions of the bylaws of the Corporation, no amendment
to this Certificate of Incorporation shall amend, modify or repeal any or all of
this Article SEVENTH unless adopted by the affirmative vote of the consent of
holders of not less than three-fourths of the outstanding shares of stock of the
Corporation entitled to vote in elections of directors, considered for purposes
of this Article as a class.
EIGHTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
-3-
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
NINTH: The aggregate number of shares which the Corporation shall have
authority to issue is 88,204,563 of which 52,005,095 shall be designated as
Common Stock, par value $0.01 per share ("Common Stock"), 1,334,000 shall be
designated as Class A Convertible Preferred Stock, par value $.01 per share
("Class A Preferred Stock"), 11,800,468 shall be designated as Class B
Convertible Preferred Stock, oar value $0.01 per share, ("Class B Preferred
Stock"), 21,065,000 shall be designated as Class C Convertible Preferred Stock,
par value $.01 per share ("Class C Preferred Stock"), and 2,000,000 shall be
designated as Class D Convertible Preferred Stock, par value $.01 per share
("Class D Preferred Stock") (the Class A Preferred Stock, Class B Preferred
Stock, Class C Preferred Stock and Class D Preferred Stock, unless otherwise
indicated, are hereinafter referred to collectively as the "Preferred Stock").
The following is a statement of the designations, preferences, limitations
and relative rights in respect of the shares of each class of stock of the
Corporation:
A. Common Stock.
------------
(1) Voting Rights. Each holder of record of Common Stock shall have
-------------
the right to one vote for each share of Common Stock standing in the name of
such holder on the books of the Corporation.
(2) Dividends. Subject to the rights of the holders of the Preferred
---------
Stock, each holder of record of Common Stock will be entitled to dividends in
such amounts and at such times as may be declared by the Board of Directors.
B. Preferred Stock. Except as provided in Section B(5)(d)(i) of this
---------------
Article, each share of Class A Preferred Stock, Class B Preferred Stock, Class C
Preferred Stock and Class D Preferred Stock is identical in all respects and
possesses the same designations, limitations and rights as each other share of
Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock and
Class D Preferred Stock, as the case may be. Except as provided in Sections
B(2)(b), B(3)(a), B(5)(a) and B(5)(d) of this Article, the Class A Preferred
Stock, Class B Preferred Stock, Class C Preferred Stock and Class D Preferred
Stock are identical in all respects and possess the same designations,
limitations and rights.
-4-
(1) Dividends. In the event that the Corporation declares or pays any
---------
dividend on the Common Stock or makes, directly or indirectly, any other
distribution in respect to the Common Stock, the holders of Preferred Stock
shall be entitled to participate with the holders of Common Stock in any such
dividends paid or set aside for payment, such that the holders of Preferred
Stock shall receive, with respect to each share of Preferred Stock, an amount
equal to (a) the dividend payable with respect to each share of Common Stock
multiplied by (b) the number of shares (and fraction of a share, if any) of
Common Stock into which such share of Preferred Stock is convertible as of the
record date for such dividend.
(2) Voting Rights.
-------------
(a) Except as otherwise provided herein or by law, the holders of
Preferred Stock shall have full voting rights and powers, they shall be entitled
to vote on all matters as to which holders of the Common Stock shall be entitled
to vote, they shall vote together with the holders of the Common Stock as a
single class, and they shall be entitled to one vote for each share of Common
Stock which would be held by them if all of their shares of Preferred Stock
would be converted into shares of Common Stock under Section B(5) of this
Article.
(b) Except as otherwise provided herein or by law, the vote or
consent of at least two-thirds of the outstanding shares of the Class C
Preferred Stock voting as a separate class shall be required for the following
actions:
(i) any change in the rights, preferences, or privileges
of the Class C Preferred Stock;
(ii) any amendment, repeal or addition of any provision of
or to the Bylaws, if such action would adversely affect the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of, the Class
C Preferred Stock;
(iii) the authorization of any class of equity securities
ranking prior to or having preference over the Class C Preferred Stock with
respect to dividends, redemption or assets of the Corporation;
(iv) the reclassification of any shares of Common Stock into
shares of any class of equity securities ranking prior to or having preference
over the Class C Preferred Stock with respect to dividends, redemption or assets
of the Corporation;
(v) the merger or consolidation of the Corporation into
or with any other corporation, the sale of all or substantially all of the
Corporation's assets, or the liquidation of the assets of the Corporation,
provided, however, that no such vote or consent under this Section B(2)(b)(v)
-------- -------
shall be required if the aggregate price to be paid to the Corporation's
stockholders in the merger, consolidation, sale or liquidation is equal to or
greater than an amount determined by multiplying (x) $1.50 per share, as
adjusted to reflect any change in the number of shares of the Corporation's
Common Stock as a result of a stock split, stock dividend, distribution
-5-
payable in shares of the Corporation's Common Stocka or other reclassification
after September 19, 1995, by (y) the number of outstanding shares of the
Corporation's Common Stock (for purposes of this determination only, a
securityholder holding capital stock of the Corporation convertible into the
Corporation's Common Stock shall be treated as having converted all such
convertible stock into the Corporation's Common Stock at the applicable
conversion rate, pursuant to Section B(5) of this Article, in effect at the
time of this determination); and
(vi) the acquisition by the Corporation of any corporation
or other business entity if such a transaction involves (A) the issuance of
equity securities of the Corporation resulting in the new securityholders having
more than 25 percent of the voting power pursuant to Sections A(1) and B(2)(a)
of his Article or (B) payment of cash consideration equivalent to 25% of the
product of (x) the sum of the number of shares of Common Stock and Preferred
Stock then outstanding and the number of such shares underlying options and
other rights to acquire such shares (irrespective of whether such shares,
options or other rights are conditional or unvested) times (y) the then most
recent price per share at which the Corporation sold any shares of Preferred
Stock in an offering that yielded gross proceeds of not less than $5,000,000 to
the Corporation.
(c) Whenever holders of the Preferred Stock or Common Stock,
separately or as a single class, are required or permitted to take any action,
such action may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.
(3) Rights of Liquidation.
---------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (any such event being hereinafter
referred to as a "Liquidation"), before any distribution of assets of the
Corporation shall be made to or set apart for the holders of the Common Stock,
the holders of the Preferred Stock shall be entitled to receive payment out of
such assets of the Corporation in an amount per share equal to $0.50 per share
for each share of Class A Preferred Stock held by such holder, $1.00 per share
for each share of Class B Preferred Stock or Class C Preferred Stock held by
such holder and $1.75 per share for each share of Class D Preferred Stock held
by such holder (such amounts being referred to herein as "Liquidation
Preference") plus any declared but unpaid dividends on such shares of Preferred
Stock. If the assets of the Corporation available for distribution to the
holders of the Preferred Stock shall not be sufficient to make in full the
payments required by this Section B(3)(a), such assets shall be distributed
ratably among the holders of the Preferred Stock based upon the aggregate
Liquidation Preferences of the shares of Preferred Stock held by each such
holder.
(b) If the assets of the Corporation available for distribution
to stockholders exceed the aggregate amounts payable pursuant to Section
B(3)(a) of this Article above, the remainder of such assets shall be
distributed to the holders of Preferred Stock and Common Stock on a pro rata
basis, with the amount distributable to the holders of Preferred Stock to be
-6-
computed on the basis of the number of shares of Common Stock which would be
held by them if immediately prior to the Liquidation all of the outstanding
shares of such Preferred Stock had been converted into shares of Common Stock
under Section B(5) of this Article.
(c) A merger or consolidation involving the Corporation in
which the Corporation is not the surviving entity and a sale, lease or
transfer of all or substantially all of the assets of the Corporation shall,
at the option of holders representing a majority of the Preferred Stock voting
as a single class, be deemed a Liquidation, unless in connection with such
transaction, each holder of Preferred Stock receives a preferred stock having
terms and conditions which are no less favorable than the terms and conditions
of the Preferred Stock held by such holder prior to the transaction.
(d) Notwithstanding the provisions contained in Section B(3)(c)
of this Article above, in the event of a merger or consolidation involving the
Corporation in which the Corporation is not the surviving entity, or a sale,
lease or transfer of all or substantially all of the assets of the
Corporation, in which a holder of Preferred Stock would receive cash and/or
marketable securities (i.e., securities registered under the Securities Act of
----
1933, as amended, at the time of delivery, or securities committed to be so
registered within 60 days after delivery) in an amount less than the aggregate
Liquidation Preference of the shares of Preferred Stock held by such holder,
then holders of a majority of the Preferred Stock then outstanding, voting as
a single class, may elect, in lieu of all other rights under the terms of the
transaction or this Article, to receive an amount equal to their aggregate
Liquidation Preference for such shares of Preferred Stock. If the holders make
such an election, each such holder shall have a priority on such holder's pro
rata portion of all cash and marketable securities received in such
transaction to the extent of the aggregate Liquidation Preference for such
holder's shares of Preferred Stock. Such election shall be made by the holders
by written notice to the Corporation within 30 days after the date of
stockholder approval of the transaction (or within 30 days after receiving
notice of such transaction from the Corporation if the transaction is not
submitted for stockholder approval).
(e) In the event that the Corporation shall, at any time, issue
any shares of Preferred Stock (i) by stock dividend or any other distribution
upon any stock of the Corporation payable in shares of Preferred Stock, or
(ii) by a subdivision of its shares of outstanding Preferred Stock, by
reclassification or otherwise, the Liquidation Preference then in effect shall
be reduced proportionately, and, in like manner, in the event of any
combination of shares of Preferred Stock, by reclassification or otherwise,
the Liquidation Preference then in effect shall be proportionately increased.
(4) Actions Requiring the Consent of the Holders of the Preferred
-------------------------------------------------------------
Stock. As long as any shares of Preferred Stock remain outstanding, the consent
-----
of the holders of at least a majority of the votes which holders of Preferred
Stock are entitled to cast, given in person or by proxy, either in writing
without a meeting or by vote at a meeting called for such purpose, shall be
necessary for effecting or validating any amendment, alteration or repeal of any
of the provisions of the Certificate of Incorporation or the Bylaws of the
Corporation which (a) increases the number of authorized shares of any class of
capital stock, (b) adversely affects the rights, preferences or powers of any
-7-
class of Preferred Stock or of the holders thereof or (c) decreases the required
time for the giving of any notice to which the holders of Preferred Stock may be
entitled.
(5) Conversion.
----------
(a) Right To Convert. A holder of record of any share or
----------------
shares of Class A Preferred Stock shall have the right at any time, at such
holder's option, to convert, without the payment of any additional
consideration, each share of Class A Preferred Stock held by such holder into
that number of fully paid and nonassessable shares of Common Stock as is
determined by dividing (i) .50 by (ii) the Conversion Factor (as defined in
Section 2(5)(d) of this Article below) then in effect for the Class A
Preferred Stock. A holder of record of any share or shares of Class B
Preferred Stock, Class C Preferred Stock or Class D Preferred Stock shall have
the right at any time, at such holder's option, to convert, without the
payment of any additional consideration, each share of Class B Preferred
Stock, Class C Preferred Stock or Class D Preferred Stock held by such holder
into that number of fully paid and nonassessable shares of Common Stock as is
determined by dividing (X) 1 by (Y) the Conversion Factor (as defined in
Section B(5)(d) of this Article below) then in effect for the Class B
Preferred Stock, Class B Preferred Stock or Class D Preferred Stock, as
applicable; provided, however, that the provisions of 2(5)(d)(i) shall not
-------- -------
apply to the Conversion Factor for Class D Preferred Stock. No fractional
shares or scrip representing fractional shares shall be issued upon the
conversion of any Preferred Stock. With respect to any fraction of a share of
Common Stock called for upon any conversion after completion of the
calculation of the aggregate number of shares of Common Stock to be issued to
such holder, the Corporation shall pay to such holder an amount in cash equal
to any fractional share to which such holder would be entitled, multiplied by
the current market value of a share, as determined in good faith by the Board
of Directors of the Corporation.
(b) Mechanics of Conversion. If the holder of shares of
-----------------------
Preferred Stock desires to exercise such right of conversion, such holder must
give written notice to the Corporation (the "Conversion Notice") of the
election by such holder to convert a stated number cf shares of Preferred
Stock (the "Conversion Shares") into shares of Common Stock on the date
specified in the Conversion Notice (which date shall not be earlier than the
date on which the Corporation receives the Conversion Notice (the "Conversion
Date")), and by surrender of the certificate or certificates representing such
Conversion Shares. The Conversion Notice shall also contain a statement of the
name or names (with addresses) in which the certificate or certificates for
Common Stock shall be issued. Promptly after the Conversion Date and the
surrender of the Conversion Shares, the Corporation shall issue and deliver,
or cause to be delivered, to the holder of the Conversion Shares or such
holder's nominee or nominees, a certificate or certificates for the number of
shares of Common Stock issuable upon the conversion of such Conversion Shares.
Such conversion shall be deemed to have been effected as of the close of
business on the Conversion Date, and the person or persons entitled to receive
the shares of Common Stock issuable upon conversion shall be treated for all
purposes as the holder or holders of record of such shares of Common Stock as
of the close of business on such date.
-8-
(c) Common Stock Reserved. The Corporation shall at all times
---------------------
reserve and keep available out of its authorized but unissued Common Stock,
solely for issuance upon the conversion of shares of Preferred Stock as herein
provided, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all of the shares of Preferred Stock at the
time outstanding.
(d) Conversion Factor. The initial conversion factor for the
-----------------
Class A Preferred Stock shall be .50 and the initial conversion factor for the
Class B Preferred Stock, the Class C Preferred Stock and the Class D Preferred
Stock shall be 1, subject to adjustment, in each case, in accordance with the
provisions in this Section B(5)(d), except that the provisions of B(5)(d)(i)
shall not apply to the Conversion Factor for Class D Preferred Stock. Such
respective conversion factors in effect from time to time, as adjusted
pursuant to the applicable provisions of this Section B(5)(d), are referred to
herein as the "Conversion Factor" for the Class A Preferred Stock, the Class B
Preferred Stock, the Class C Preferred Stock or the Class D Preferred Stock,
as applicable. All of the remaining provisions of this Section B(5)(d) shall
apply separately to the respective Conversion Factors in effect from time to
time; provided, however, that the provisions of B(5)(d)(i) shall not apply to
-------- -------
the Conversion Factor for Class D Preferred Stock.
(i) In the event that the Corporation shall, at any time
or from time to time, issue or sell any shares of the capital stock of the
Corporation (including treasury shares, but excluding (x) 1,334,000 shares of
Class A Preferred Stock and 21,065,000 shares of Class C Preferred Stock, (y)
an aggregate of 15,805,627 shares of Common Stock and an aggregate of
11,800,468 shares of Class B Preferred Stock that have been issued, have been
reserved for issuance or will be issued pursuant to options, warrants or other
commitments which have been granted or executed as of December 12, 1995 or
will be granted or executed pursuant to the Corporation's 1993 Stock Incentive
Plan, and (z) the shares of Common Stock issuable upon conversion of the
Preferred Stock), then, immediately upon such issuance or sale, the Conversion
Factor shall be reduced as follows:
(A) The Conversion Factor shall be changed to a number
determined by multiplying the Conversion Factor in effect immediately prior to
such issuance by the following fraction:
A + B
---
C
-------------
A + D
wherein:
A = the number of Outstanding Shares (as defined below)
immediately prior to the subject issuance;
B = the aggregate consideration in dollars for the shares then
being issued, expressed as an absolute number;
-9-
C = the Conversion Factor in effect immediately prior to the
subject issuance with respect to the applicable class of
Preferred Stock; and
D = the number of shares then being issued.
The applicable Conversion Factor shall be further reduced from time to time
thereafter whenever any shares are so issued or converted for a price per share
lower than the amount of the applicable Conversion Factor, then in effect, as
adjusted prior to that date.
(B) In the event that any shares 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 of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation in
connection therewith. In the event that any shares shall be issued 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, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Corporation in connection
therewith. Whenever shares are issued upon the exercise of warrants, options or
other conversion rights, the consideration received therefor shall include both
the consideration paid upon the issuance and upon the exercise of such warrant,
option or other right.
(C) In the event that the Corporation shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase any Common Stock or securities convertible into
Common Stock ("Convertible Securities"), or any options for the purchase of any
Common Stock or Convertible Securities, whether or not such rights or options or
the right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which shares of Common Stock issuable
upon the exercise of such rights or options or upon 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 rights or options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the exercise of such
rights or options, or plus, in the case of any Convertible Securities or rights
or options to purchase 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 rights or options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such rights or options)
shall be less than the Conversion Factor in effect immediately prior to the time
of the granting of such rights or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or options or
upon conversion or exchange of all such Convertible Securities issuable or
issuable upon the exercise of such rights or options shall be deemed to be
outstanding as of the date of the granting of such rights or options and to have
been issued for such price per share, with the effect on the applicable
Conversion Factor specified in Section (5)(d)(i) of this Article. No further
adjustment of the applicable Conversion Factor shall be mafde upon the actual
issue of such Common Stock or upon
-10-
the actual issue of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(D) If the purchase price provided for in any right or option referred
to in Section B(5)(d)(i)(C) of this Article, or the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities, or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Stock shall change (other than under or by reason of
provisions designed to protect against dilution), the Conversion Factor then in
effect hereunder shall forthwith be readjusted (increased or decreased, as the
case may be) to the Conversion Factor which would have been in effect at such
time had such rights, 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.
(E) Notwithstanding the foregoing, upon the consent of the holders of
two-thirds of the applicable class of Preferred Stock affected and then
outstanding, if the Conversion Factor for the applicable class of Preferred
Stock, as set forth in this Section B(5)(d)(i) otherwise would be reduced, no
such reduction in the Conversion Factor for the applicable class of Preferred
Stock, as set forth in this Section B(5)(d)(i), shall occur.
(F) Notwithstanding the foregoing, if any holder of shares of
Preferred Stock is entitled to exercise the preemptive rights (the "Preemptive
Right") set forth in Section 9 of the Second Class C Preferred Stock Purchase
Agreement, dated as of September 19, 1995, or in Schedule 9 of the Amendment and
Waiver Agreement, dated as of September 19, 1995 (collectively, the "Purchase
Agreement") with respect to any "Issuance" (as defined in Section 9.2 of the
Purchase Agreement) which would, absent the provisions of this subsection (F),
result in a reduction of the Conversion Factor applicable to shares of such
holder's Preferred Stock pursuant to Section B(5)(d)(i) of this Article, and if
such holder (a "Non-Participating Holder") does not, by exercise of such
holder's Preemptive Right, acquire not less than such holder's "Proportionate
Percentage" (as defined in Section 9.2 of the Purchase Agreement) of the
Issuance, then all of such holder's shares of Class A Preferred Stock, Class B
Preferred Stock and Class C Preferred Stock shall automatically, and without
further action on the part of such holder, be converted effective upon, subject
to and concurrently with consummation of the Issuance (the "Issuance Date") as
follows: each share of Class A Preferred Stock held by such Non-Participating
Holder shall be converted into one share of a newly created series of preferred
stock (having such number of shares as the Board of Directors may by resolution
fix) which such class shall be identical in all respects to the Class A
Preferred Stock, except that the Conversion Factor of such class shall be fixed
immediately prior to the Issuance Date and shall be subject to no further
adjustments pursuant to Section B(5)(d)(i) of this Article; each share of Class
B Preferred Stock held by such Non Participating Holder shall be converted into
one share of a newly created class of
-11-
preferred stock (having such number of shares as the Board of Directors may by
resolution fix) which such class shall be identical in all respects to the
Class B Preferred Stock, except that the Conversion Factor of such class shall
be fixed immediately prior to the Issuance Date and shall be subject to no
further adjustments pursuant to Section B(5)(d)(i) of this Article; and each
share of Class C Preferred Stock held by such Non-Participating Holder shall
be converted into one share of a newly created class of preferred stock
(having such number of shares as the Board of Directors may by resolution fix)
which such class shall be identical in all respects to the Class C Preferred
Stock, except that the Conversion Factor of such class shall be fixed
immediately prior to the Issuance Date and shall be subject to no further
adjustments pursuant to Section B(5)(d)(i) of this Article. The Board of
Directors of the Corporation shall take all necessary actions to designate
each such new class. Upon such conversion, the shares of Class A Preferred
Stock, Class B Preferred Stock and Class C Preferred Stock so converted shall
be cancelled and not subject to reissuance, but instead shall be redesignated
by the Board of Directors of the Corporation in accordance with the terms of
this Section B(5)(d)(i)(F).
(ii) Each adjustment in a Conversion Factor shall be
calculated to the nearest tenth of a cent.
(iii) As used in this Section 8(5)(d), the term "Outstanding
Shares" shall be deemed to include the number of issued and outstanding shares
of Common Stock, plus the number of shares of Common Stock issuable upon the
conversion of the issued and outstanding shares of Preferred Stock, but shall
not include the new shares of Common Stock then being issued by the Corporation.
(iv) In the event that the Corporation shall, at any time,
issue any shares of Common Stock (A) by stock dividend or any other distribution
upon any stock of the Corporation payable in shares of Common Stock or in shares
of Preferred Stock, or (B) by subdivision of its shares of outstanding Common
Stock, by reclassification or otherwise, the Conversion Factor then in effect
shall be reduced proportionately, and, in like manner, in the event of any
combination of shares of Common Stock, by reclassification or otherwise, the
Conversion Factor then in effect shall be proportionately increased.
(v) If any capital reorganization or reclassification of
the Common Stock of the Corporation, or consolidation or merger of the
Corporation with or into another corporation, or the sale or conveyance of all
or substantially all of its assets to another corporation shall be effected,
then, as a condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
holders of the Preferred Stock shall thereafter have the right to receive, in
lieu of the shares of Common Stock of the Corporation immediately theretofore
receivable with respect to such shares of Preferred Stock upon the exercise of
their conversion rights, such shares of stock, securities or assets as would
have been issued or payable with respect to or in exchange for the number of
outstanding shares of such Common Stock immediately theretofore receivable
with respect to such shares of Preferred Stock upon the exercise of such
rights had such reorganization, reclassification, consolidation, merger or
sale not taken place. In any such case, appropriate provision shall be made
with respect to the rights and interests of the holders of the Preferred Stock
to the end that such conversion rights (including, without limitation,
provisions for adjustment of the applicable Conversion Factor) shall
thereafter be applicable, as nearly as may be practicable in relation to any
shares of stock, securities or assets thereafter deliverable upon the exercise
thereof. The Corporation shall not effect any such consolidation, merger or
sale, unless it provides the holders of the Preferred Stock at least 30 days'
advance notice
-12-
thereof, and prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets, shall
assume by written instrument, executed and mailed or delivered to the holders
of the Preferred Stock, the obligation to deliver to such holders the shares
of stock, securities or assets as, in accordance with the foregoing
provisions, such holders may be entitled to receive upon conversion of the
shares of Preferred Stock held by such holder.
(vi) If any event occurs as to which the other provisions of
this Section B(5)(d) are not strictly applicable, or if strictly applicable
would not fairly protect the conversion rights of the Preferred Stock in
accordance with the intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such intent and principles, so as to protect such conversion
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the applicable Conversion Factor as otherwise determined pursuant
to this Section B(5)(d).
(e) Stock Transfer Taxes. The issuance of stock certificates upon the
--------------------
conversion of the Preferred Stock shall be made without charge to the converting
holder for any tax in respect of such issuance. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares in any name other than
that of the holder of such shares of Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any such stock certificate
unless and until the person or persons requesting the issuance thereof shall
have paid to the Corporation the amount of such tax or shall have established to
the satisfaction of the Corporation that such tax has been paid.
(f) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Factor, the Corporation, at its
expense, promptly shall compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Preferred Stock
a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Factor at the time in effect for the Preferred Stock, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of such Preferred Stock owned
by such holder.
(g) Notices of Record Date. In the event of any fixing by the
----------------------
Corporation of a record date for the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any shares of
Common Stock or other securities, or any right to subscribe for, purchase or
otherwise acquire, or any option for the purchase of, any shares of stock of any
class or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of Preferred Stock at least 30 days prior
to the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
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(h) Notices. Any notice required by the provisions of this Section
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B(5) to be given to the holders of shares of Preferred Stock shall be deemed
given it deposited in the United States mail, first class postage prepaid, and
addressed to each holder of record at such holder's address appearing on the
books of the Corporation.
(6) Mandatory Conversion.
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(a) The Corporation shall cause the conversion ("Mandatory
Conversion") of all of the shares of Preferred Stock into fully paid and
nonassessable shares of Common Stock, at the conversion rate then in effect,
upon the occurrence of the Corporation's underwritten public offering of its
Common Stock pursuant to a registration statement (other than a registration
statement relating to an offer and sale of securities to employees of, or other
persons providing services to, the Corporation pursuant to an employee or
similar benefit plan, registered on Form S-8 or a comparable or successor form)
filed under the Securities Act of 1933, as amended, which yields to the
Corporation not less than $15,000,000 (before deducting any underwriters' or
brokers' discounts, fees or commissions) and under which the offering price to
the public is equal to at least $1.50 per share (adjusted for any stock splits,
stock dividends, recapitalizations, mergers, consolidations or similar events
occurring after September 19, 1995) (a "Qualifying Public Offering").
(b) The date ("Mandatory Conversion Date") on which such Mandatory
Conversion shall be deemed to occur is the date on which a closing occurs
pursuant to a Qualifying Public Offering.
(c) On the Mandatory Conversion Date, all rights of the holders of
shares of the Preferred Stock as such holders shall cease except their right to
receive payment of any dividends declared and unpaid to such date; such shares
shall no longer be deemed to be outstanding; and the holders thereof shall on
and after such date be conclusively deemed for all purposes to be holders of the
shares of Common Stock into which their shares of Preferred Stock were
converted.
(d) The Corporation shall promptly give all holders of record of
shares of Preferred Stock written notice of the date that a Qualifying Public
Offering will occur or is anticipated to occur. Such notice shall also specify
the place designated for exchanging the shares of Preferred Stock for shares of
Common Stock. Such notice shall be sent by first class mail, postage prepaid,
to each holder of record of shares of Preferred Stock at such holder's address
as shown in the records of the Corporation. Each holder of shares of Preferred
Stock shall surrender its certificate or certificates for all such shares to the
Corporation or the transfer agent at the place designated in such notice and
shall, upon surrender, receive certificates for the number of shares of Common
Stock to which such holder is entitled.
(e) For the purpose of calculating the conversion ratio of Preferred
Stock into Common Stock in the event of a Mandatory Conversion, such calculation
shall be made in accordance with Section B(5) of this Article.
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IN WITNESS WHEREOF, the undersigned have executed this Restated Certificate
of Incorporation on behalf of the Corporation and have attested such execution
and do verify and affirm, under penalty of perjury, that this Restated
Certificate of Incorporation is the act and deed of the Corporation and that the
facts stated herein are true as of this 19th day of June, 1996.
GENVEC, INC.
By:
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Xxxxxx X. X'Xxxxxx
President
Attest:
By:
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Xxxxxxx X. Xxxxxxxx III
Secretary
(Corporate Seal)
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