EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
OF AUTO-BY-TEL CORPORATION
(Pursuant to Section 228, 242 and 245 of the
General Corporation Law of the State of Delaware)
Auto-By-Tel Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Delaware General
Corporation Law")
DOES HEREBY CERTIFY:
FIRST: That this Corporation was originally incorporated on May 17, 1996
under the name of Auto-By-Tel Corporation, pursuant to the Delaware General
Corporation Law.
SECOND: That the Board of Directors has duly adopted resolutions proposing
to amend and restate the Restated Certificate of Incorporation of this
Corporation filed with the Secretary of State of Delaware on August 23, 1996,
declaring said amendment and restatement to be advisable and in the best
interests of this corporation and its stockholders, and authorizing the
appropriate officers of this Corporation to solicit the consent of the
stockholders therefor which resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Restated Certificate of Incorporation of this
Corporation be amended and restated in its entirety as follows:
"ARTICLE I
The name of the Corporation is Auto-By-Tel Corporation (the "Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, zip code 19801. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law.
ARTICLE IV
(A) Classes of Stock. This Corporation is authorized to issue two classes
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of stock, to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares that this Corporation is authorized to issue is fifty
seven million four hundred sixty-seven thousand nine hundred fifteen
(57,467,915). The number of shares of Preferred Stock authorized to be issued is
seven million four hundred sixty-seven thousand nine hundred fifteen
(7,467,915), par value $0.001 per share, one million five hundred thousand
(1,500,000) of which have been designated Series A Preferred Stock (the "Series
A Preferred Stock"), nine hundred sixty seven thousand nine hundred fifteen
(967,915) of which have been designated Series B Preferred Stock (the "Series B
Preferred Stock") and five million (5,000,000) of which shall be undesignated.
The number of shares of Common Stock authorized to be issued is fifty million
(50,000,000), par value $.001 per share. Upon the filing of this Amended and
Restated Certificate of Incorporation, each three shares of Common Stock of the
Corporation shall be reconstituted as and converted into five shares of Common
Stock (the "Stock Split).
(B) Rights, Preferences and Restrictions of the Preferred Stock.
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The undesignated shares of Preferred Stock may be issued from time to time
in one or more series pursuant to a resolution or resolutions providing for such
issue duly adopted by the Board of Directors (authority to do so being hereby
expressly vested in the Board). The Board of Directors is further authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued series of Preferred Stock and, to fix the
number of shares of any series of Preferred Stock and the designation of any
such series of Preferred Stock. The Board of Directors, within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
The rights, preferences, privileges, and restrictions granted to and
imposed on the Preferred Stock are as set forth below in this Article IV(B).
Section 1. Dividends.
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(a) The holders of outstanding shares of Series A Preferred Stock
shall be entitled to receive, when and as declared by the Board of Directors out
of funds legally available therefor, payable in preference and priority to any
declaration or payment of any dividend on the Series B Preferred Stock or Common
Stock of the Corporation, dividends in cash at an annual rate of $.80 per share
of Series A Preferred Stock. The holders of outstanding shares of Series B
Preferred Stock shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available therefor, payable in preference and
priority to any declaration or payment of any dividend on the Common Stock of
the Corporation, dividends in cash at an annual rate of $.80 per share of Series
B Preferred Stock. The right to such dividends shall not be cumulative and no
right to such dividends shall accrue to holders of Series A Preferred Stock or
Series B Preferred Stock by reason of the fact that dividends on such shares are
not declared in any prior year. No dividend or other distribution shall be made
with respect to the Series B Preferred Stock in any fiscal year until full
dividends at the rate set forth in this Section 1(a) have been paid on the
Series A Preferred Stock. No dividend or other distribution
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shall be made with respect to the Common Stock in any fiscal year until full
dividends at the rate set forth in this Section 1(a) have been paid on the
Series A Preferred Stock and Series B Preferred Stock.
(b) Definition of Distribution. For purposes of this Section 1,
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unless the context otherwise requires, a "distribution" shall mean the transfer
of cash or other property without consideration whether by way of dividend or
otherwise, payable other than in Common Stock, or the purchase or redemption of
shares of the Corporation (other than repurchases at cost of Common Stock issued
to or held by employees, officers, directors or consultants of the Corporation
or its subsidiaries upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase) for cash or property.
Section 2. Liquidation Preference.
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(a) In the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, the holders of Series A Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or surplus funds of the Corporation to the holders of the
Series B Preferred Stock or Common Stock, an amount equal to $10.00 per share
for each share of Series A Preferred Stock then held by them (as adjusted for
any stock split, combination, consolidation, or stock distributions or stock
dividends effected with respect to such shares after the Original Issue Date)
plus all declared but unpaid dividends, if any (the "Series A Liquidation
Preference"); provided that upon the occurrence of any event described in
Section 2 (d) below, the holders of Series A Preferred Stock shall be entitled
to receive, at their option, either the Series A Liquidation Preference
described above or the consideration, if any, which would be payable to such
holders as of they had converted their shares of Series A Preferred Stock into
Common Stock immediately prior to such event. If the assets and funds thus
distributed among the holders of Series A Preferred Stock shall be insufficient
to permit the payment to such holders of the full aforesaid preferential amount,
then the entire assets and surplus funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A
Preferred Stock in proportion to the number of shares of Series A Preferred
Stock then held by them.
(b) After payment has been made to the holders of Series A Preferred
Stock of the full amounts to which they shall be entitled as set forth in
subparagraph (a) of this Section 2, the holders of Series B Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the Corporation to the holders of Common
Stock, an amount equal to $9.35 per share for each share of Series B Preferred
Stock then held by them (as adjusted for any stock split, combination,
consolidation, or stock distributions or stock dividends effected with respect
to such shares after the Original Issue Date) plus all declared but unpaid
dividends, if any (the "Series B Liquidation Preference"); provided that upon
the occurrence of any event described in Section 2(d) below, the holders of
Series B Preferred Stock shall be entitled to receive, at their option, either
the Series B Liquidation Preference described above or the
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consideration, if any, which would be payable to such holders as of they had
converted their shares of Series B Preferred Stock into Common Stock immediately
prior to such event. If the assets and funds thus distributed among the holders
of Series B Preferred Stock shall be insufficient to permit the payment to such
holders of the full aforesaid preferential amount, then the entire assets and
surplus funds of the Corporation legally available for distribution to the
holders of Series B Preferred Stock shall be distributed ratably among the
holders of the Series B Preferred Stock in proportion to the number of shares of
Series B Preferred Stock then held by them.
(c) After payment has been made to the holders of Series A Preferred
Stock and Series B Preferred Stock of the full amounts to which they shall be
entitled as set forth in subparagraphs (a) and (b) of this Section 2, then the
entire remaining assets and surplus funds of the Corporation legally available
for distribution, if any, shall be distributed ratably among the holders of
Common Stock based upon the number of shares of Common Stock then held by them.
(d) A merger or consolidation of the Corporation with or into any
other corporation or corporations, or the merger of any other corporation or
corporations into the Corporation, in which the stockholders of the Corporation
receive distributions in cash or securities of another corporation or
corporations as a result of such consolidation or merger and in which the
stockholders of the Corporation do not own at least 50% of the voting power of
the surviving corporation after the consolidation or merger, or a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 2.
Section 3. Conversion. The holders of the Series A Preferred Stock and
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Series B Preferred Stock shall have conversion rights (the "Conversion Rights")
as follows:
(a) Right to Convert. Each share of Series A Preferred Stock and
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Series B Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
this Corporation or any transfer agent for the Preferred Stock, into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing $10.00 in the case of the Series A Preferred Stock, or $9.35 in the
case of the Series B Preferred Stock, by the Conversion Price, determined as
hereinafter provided, in effect for such series of Preferred Stock at the time
of conversion. The initial Conversion Price per share of the Series A Preferred
Stock shall be $10.00 and the initial Conversion Price for the Series B
Preferred Stock shall be $9.35, provided, however, that in the event that the
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Corporation has not consummated an initial public offering of its Common Stock
on or prior to July 31, 1997, then the initial Conversion Price of the Series B
Preferred Stock shall be deemed to be $6.91 for all purposes under this Article
IV. The Conversion Price per share of the Series A Preferred Stock and Series B
Preferred Stock shall be subject to adjustment as hereinafter provided. Upon
conversion, all declared and unpaid dividends on the Series A Preferred Stock
and Series B Preferred Stock shall be paid in cash, to the extent legally
permitted and in accordance with Section 4(B)(1)(a) hereof.
(b) Automatic Conversion.
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(i) Each share of Series A Preferred Stock and Series B
Preferred Stock shall, with notice to the holders thereof delivered promptly
thereafter, automatically be converted into shares of Common Stock at the
applicable Conversion Price then in effect upon the earlier of (A) the date upon
which this Corporation obtains the consent of the holders of two-thirds of the
then outstanding shares of Series A Preferred Stock and Series B Preferred
Stock, voting together as a single class, (B) (1) in the case of Series A
Preferred Stock, the date on which fewer than 300,000 shares of Series A
Preferred Stock (appropriately adjusted for any stock splits, combinations,
consolidations, or stock distributions or dividends effected with respect to
such shares after the Original Issue Date) remain outstanding, or (2) in the
case of Series B Preferred Stock, the date on which fewer than 200,000 shares of
Series B Preferred Stock (appropriately adjusted for any stock splits,
combinations, consolidations, or stock distributions or dividends effected with
respect to such shares after the Original Issue Date) remain outstanding, or (C)
the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation to the
public at a price per share (before deduction of underwriter discounts and
commissions and offering expenses) of not less than $9.00 per share
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends effected with respect to such shares after the
Original Issue Date) and an aggregate offering price to the public of not less
than $30,000,000 (the "Initial Public Offering").
(ii) In the event of the automatic conversion of the Series A
Preferred Stock and Series B Preferred Stock as set forth in Section 3(b)(i)(C)
above, the person(s) entitled to receive the Common Stock issuable upon such
conversion shall not be deemed to have converted such shares until immediately
prior to the closing of such sale of securities.
(c) Mechanics of Conversion. No fractional shares of Common Stock
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shall be issued upon conversion of Preferred Stock. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then current fair value of the
Common Stock, as determined in good faith by the Board of Directors. Before any
holder of Preferred Stock shall be entitled to convert the same into full shares
of Common Stock and to receive certificates therefor, such holder shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or of any transfer agent for the Preferred Stock, and shall
give written notice to the Corporation at such office of the election to convert
the same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued; provided, however,
that in the event of an automatic conversion pursuant to Section 3(b)(i), the
outstanding shares of Preferred Stock shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent. The Corporation shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such automatic conversion
unless the certificates evidencing such shares of Preferred Stock are either
delivered to the Corporation or its transfer agent as provided above, or the
holder notifies the Corporation or its transfer agent that such certificates
have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by
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it in connection with such certificates. The Corporation shall, as soon as
practicable after such delivery, or such agreement and indemnification in the
case of a lost certificate, issue and deliver at such office to such holder of
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable as the result of
a conversion into fractional shares of Common Stock. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Preferred Stock to be converted, or in the
case of automatic conversion on the record date for such conversion, which shall
not be earlier than the date notice of conversion is received by holders, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(d) Adjustments to Conversion Price for Stock Splits, Distributions
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and Recapitalizations.
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(i) Stock Splits, Subdivisions, Dividends and Distributions.
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In the event this Corporation should at any time or from time to time after the
Original Issue Date (as defined below), fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price in effect for each series of Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of Preferred Stock shall be increased in proportion to such increase
of the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents. The Stock Split effected by Section
IV(A) of this Amended and Restated Certificate of Incorporation shall not cause
any adjustment to the Conversion Price of the Series B Preferred Stock.
(ii) Combinations. If the number of shares of Common Stock
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outstanding at any time after the Original Issue Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination (or the date of such combination if no record
date is fixed), the Conversion Price in effect for each series of Preferred
Stock shall be appropriately increased so that the number of shares of Common
Stock issuable on conversion of each share of Preferred Stock shall be decreased
in proportion to such decrease in outstanding shares.
(iii) Other Distributions. In the event this Corporation shall at
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any time or from time to time after the Original Issue Date, fix a record date
for the determination of holders of Common Stock entitled to receive a
distribution payable in securities of the Corporation or other persons,
evidences of indebtedness issued by this Corporation or other persons, assets or
options or
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rights not referred to in Section 3(d)(i), then, in each such case for the
purpose of this Section 3(d)(iii), the holders of shares of Preferred Stock
shall, as of such record date, be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Preferred Stock are
convertible as of such record date.
(iv) Recapitalization. If at any time or from time to time there
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shall be a recapitalization of the Common Stock whereby the Common Stock
issuable upon conversion of the Preferred Stock shall be changed into the same
or a different number of shares of any other class or classes of stock, whether
by reorganization, reclassification or otherwise, (other than a subdivision,
dividend, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3), provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon conversion of the
shares of Preferred Stock the number of shares of stock or other securities or
property of the Corporation which a holder of Common Stock deliverable upon
conversion would have been entitled to receive on such recapitalization. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 3 with respect to the rights of the holders of
Preferred Stock after the recapitalization to the end that the provisions of
this Section 3 (including adjustment of the Conversion Price then in effect for
each series of Preferred Stock and the number of shares issuable upon conversion
of shares of Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
(e) Adjustments to Conversion Price. Subject to the terms of Section
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6 hereof, the Conversion Price in effect from time to time for each series of
Preferred Stock shall be subject to adjustment in certain cases as follows:
(i) Special Definitions. For purposes of this Section 3, the
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following definitions shall apply:
(A) "Options" shall mean rights, options or warrants to
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subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(B) "Original Issue Date" shall mean the date on which the
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first share of such series of Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences of
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indebtedness, Preferred Stock or other securities convertible into or
exchangeable for Common Stock.
(D) "Additional Shares of Common" shall mean all shares of
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Common Stock issued (or, pursuant to Section 3(e)(iii), deemed to be issued) by
the Corporation after the Original Issue Date, other than shares of Common Stock
issued or issuable:
(1) upon conversion of shares of Series A Preferred Stock
or Series B Preferred Stock;
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(2) up to a maximum of 3,530,833 shares (as appropriately
adjusted for any stock splits, combinations, consolidations, or stock
distributions or dividends with respect to such shares) to officers, directors
or employees of, or consultants to, the Corporation (other than Peter Ellis or
John Bedrosian) pursuant to a stock grant, stock option plan or stock purchase
plan or other stock incentive agreement or arrangement approved by the Board of
Directors;
(3) as a dividend or distribution on Series A Preferred
Stock or Series B Preferred Stock;
(4) in connection with any transaction for which
adjustment is made pursuant to Section 3(d) hereof;
(5) upon the exercise of warrants granted incidental to a
bona fide commercial transaction (unless the grant of such warrant is opposed by
the holders of more than two-thirds of the Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class, following notice from the
Corporation to the holders of Series A Preferred Stock and Series B Preferred
Stock to be delivered to such holders at least ten (10) business days prior to
such grant; provided further that no notice need be given and the holders of the
Series A Preferred Stock and Series B Preferred Stock shall not have the right
to object to the issuance of warrants to purchase up to a maximum of 5,000
shares so long as they are granted incidental to a bona fide commercial
transaction and approved by the Board of Directors); and
(6) any shares of Common Stock issued, issuable or,
pursuant to Section 3(e)(iii), deemed to be issued, if the holders of a majority
of the Series A Preferred Stock and Series B Preferred Stock, voting together as
a class, agree in writing that such shares shall not constitute Additional
Shares of Common.
(ii) No Adjustment of Conversion Price. Subject to the terms of
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Section 6 hereof, no adjustment in the Conversion Price for each series of
Preferred Stock shall be made in respect of the issuance of Additional Shares of
Common unless the consideration per share for an Additional Share of Common
issued or deemed to be issued by the Corporation is less than the Conversion
Price for such Series in effect on the date of, and immediately prior to, such
issue.
(iii) Options and Convertible Securities. In the event the
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Corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number, including
provisions designed to protect against dilution) of Common Stock issuable upon
the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares
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of Common shall not be deemed to have been issued unless the consideration per
share (determined pursuant to Section 3(e)(v) hereof) of such Additional Shares
of Common would be less than the Conversion Price for such series of Preferred
Stock in effect on the date of, and immediately prior to, such issue, or such
record date, as the case may be, and provided further that in any such case in
which Additional Shares of Common are deemed to be issued:
(A) no further adjustment in the Conversion Price for a
series of Preferred Stock shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by their terms
provide, with the passage of time, by reason of antidilution provisions or
otherwise, for any change in the consideration payable to the Corporation, or
change in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such change
becoming effective, be recomputed to reflect an appropriate increase or decrease
reflecting such change insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities; provided, however,
that no such adjustment of the Conversion Price shall affect Common Stock
previously issued upon conversion of the Preferred Stock;
(C) upon the expiration or cancellation of any such Options
or any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration or
cancellation, be recomputed as if:
(1) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common issued were shares of Common
Stock, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
Convertible Securities which were actually converted or exchanged plus the
additional consideration, if any, actually received by the Corporation upon such
conversion or exchange; and
(2) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the consideration
received by the Corporation for the Additional Shares of Common deemed to have
been then issued was the consideration actually received the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation upon the issue of the
Convertible Securities with respect to which such
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Options were actually exercised; and
(D) no readjustment pursuant to clause (B) or (C) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (1) the applicable Conversion Price on the original
adjustment date, or (2) the applicable Conversion Price that would have resulted
from any issuance of Additional Shares of Common between the original adjustment
date and such readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
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Shares of Common. In the event this Corporation shall issue Additional Shares
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of Common (including Additional Shares of Common deemed to be issued pursuant to
Section 3(e)(iii)) for a consideration per share less than the Conversion Price
for a particular series of Preferred Stock in effect on the date of, and
immediately prior to, such issue, then and in such event, the Conversion Price
of such series of Preferred Stock shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by multiplying
such Conversion Price by a fraction, (x) the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such issue
plus the number of shares of Common Stock which the aggregate consideration
received by the Corporation for the total number of Additional Shares of Common
so issued would purchase at such Conversion Price, and (y) the denominator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of such Additional Shares of Common so
issued; provided, that, for the purposes of this Section 3(e)(iv), all shares of
Common Stock issuable upon exercise, conversion or exchange of outstanding
Options or Convertible Securities or Preferred Stock shall be deemed to be
outstanding; and, further provided, that immediately after any Additional Shares
of Common are deemed issued pursuant to Section 3(e)(iii), such Additional
Shares of Common shall be deemed to be outstanding.
(v) Determination of Consideration. For purposes of this
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Section 3(e), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(A) Such consideration shall:
(1) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(2) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
in good faith in the exercise of reasonable business judgment by the Board of
Directors of the Corporation; and
(3) in the event Additional Shares of Common are issued
together with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1)
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and (2) above, as determined in good faith by the Board of Directors of the
Corporation.
(B) Options and Convertible Securities.
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(1) The consideration per share received by the
Corporation for Additional Shares of Common deemed to have been issued pursuant
to Section 3(e)(iii) shall be the sum of (x) the total amount, if any, received
or receivable by the Corporation as consideration for the issue of such Options
or Convertible Securities plus (y) the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration, including any provisions designed to protect against dilution)
payable to the Corporation upon the exercise of such Options or the conversion
or exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities.
(2) The number of Additional Shares of Common deemed to
have been issued pursuant to Section 3(e)(iii) hereof shall be the maximum
number of shares of Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for a subsequent
adjustment of such number, including any provisions designed to protect against
dilution) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(f) Certificate as to Adjustments. Upon the occurrence of each
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adjustment or readjustment of the Conversion Price in effect for a series of
Preferred Stock pursuant to this Section 3, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of shares of such series 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 Price at the time in
effect, and (iii) the number of shares of Common Stock and the amount, if any,
of other property which at the time would be received upon the conversion of a
share of such series of Preferred Stock.
Section 4. Redemption. The Preferred Stock shall not be redeemable.
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Section 5. Voting Rights.
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(a) General. Except as otherwise required by law or as set
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forth herein, each holder of shares of Preferred Stock shall be entitled to vote
in all matters for which shareholders are entitled to vote, that number of votes
equal to the whole number of shares of the Corporation's Common Stock issued or
issuable upon the conversion of such holder's shares of Preferred Stock
immediately after the close of business on the record date fixed for a
shareholder meeting or the effective date of such written consent.
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(b) Board of Directors. The authorized number of directors of
------------------
the Corporation shall be set forth in the Bylaws of the Corporation and may be
increased or decreased by an amendment to such Bylaws in accordance with their
provisions. As long as 600,000 or more of the shares of Series A Preferred Stock
originally issued remain outstanding, the holders of shares of Series A
Preferred Stock, voting separately as a class, shall be entitled to elect one
(1) director of the Corporation at each annual election of directors (and to
fill any vacancies with respect thereto); provided that if the authorized number
of directors is increased to greater than five (5) members, the holders of
shares of Series A Preferred Stock, voting separately as a class, shall be
entitled to elect two (2) directors at each annual election of directors (and to
fill any vacancies with respect thereto).
Section 6. Covenants. In addition to any other rights provided by law,
---------
so long as at least an aggregate of 600,000 shares of Preferred Stock are
outstanding, this Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of two-thirds of the outstanding shares
of the Preferred Stock, voting as a single class:
(a) amend or repeal any provision of, or add any provision to, this
Corporation's Certificate of Incorporation or Bylaws if such action would alter
or change the preferences, rights, privileges, or powers of, or the restrictions
provided for the benefit of, any series of Preferred Stock in an adverse manner;
(b) increase the number of directors to greater than ten (10) members;
(c) increase the number of authorized shares of any series of
Preferred Stock;
(d) sell any shares for consideration other than cash or the
forgiveness of debt;
(e) authorize any new shares or reclassify any Common Stock into
shares of any class of stock having any preference or priority as to dividends,
redemption rights, liquidation preferences, conversion rights, voting rights or
rights otherwise superior to or on a parity with any such preference or priority
of any series of Preferred Stock;
(f) sell or otherwise dispose of all or substantially all of the
assets or business of the Corporation;
(g) effect a consolidation, reorganization or merger (including,
without limitation, the issuance of any shares of stock, or rights to acquire
shares of stock, which would result in the stockholders of the Corporation
immediately prior to such issuance owning less than two-thirds of the voting
power of the Corporation on a fully diluted basis after such issuance) of the
Corporation with or into any other corporation;
(h) declare or pay any dividends, in cash or otherwise, or make any
distributions to its shareholders, or purchase, redeem or otherwise acquire any
of its outstanding capital stock, or set
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apart assets for a sinking or other analogous fund for the purchase, redemption,
retirement or other acquisition of, any shares of its capital stock;
(i) purchase, acquire or agree to purchase or acquire or invest in the
business, property or assets of, or any securities of, any other company or
business, except that the Corporation may (A) invest its excess cash in Cash
Equivalents and (B) make such purchase, acquisition or investment with respect
to a wholly-owned subsidiary of the Corporation to the extent otherwise
permitted hereunder;
(j) create, assume, incur, issue, guarantee or otherwise become
directly or indirectly liable in respect of any Indebtedness;
(k) without the approval of the director or directors designated by
the holders of the Preferred Stock, enter into any compensation or benefit
arrangement with any employee, officer or director which would result in total
taxable compensation from the Corporation and its subsidiaries of greater than
$150,000 per annum; provided, however, that the Corporation may hire two (2)
additional executive officers at annual taxable compensation from the
Corporation and its subsidiaries of up to $250,000 each without complying with
the provisions of this Section 6; or
(l) sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any properties or assets from, or enter
into any contract, agreement, understanding, loan, advance or guarantee with, or
for the benefit of, any Affiliate other than in the ordinary course of business.
For purposes of this Section 6:
(1) the term "Cash Equivalents" means (i) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of not more than six months
from the date of acquisition, (ii) certificates of deposit or Eurodollar time
deposits having maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any domestic commercial bank having capital and
surplus in excess of $500 million and a Keefe Bank Watch Rating of "B" or
better, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (i) and (ii) entered
into with any financial institution meeting the qualifications described in
clause (ii) above, and (iv) commercial paper of any person that is not a
subsidiary or an Affiliate of the Corporation having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group, and maturing within six months after the date of acquisition;
(2) the term "Indebtedness" means, with respect to any person or
entity, calculated without duplication, any indebtedness of such person or
entity, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or bankers' acceptances or
representing capital lease obligations or the balance deferred and unpaid of the
purchase price of any
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property, or guarantees of any of the foregoing, except any such balance that
constitutes an accrued expense or trade payable to the extent that any such
accrued expense or trade payable is not more than 90 days overdue or is
otherwise being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; and
(3) the term "Affiliate" means, with respect to any person or
entity, any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with, such person or
entity (for purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person or entity, whether
through the ownership of voting securities, by agreement or otherwise); provided
that no holder of Preferred Stock (or Common Stock issued upon conversion
thereof) shall be deemed to be an Affiliate.
Notwithstanding the foregoing, the Corporation may undertake an initial
public offering unless the initial public offering is opposed in writing by the
holders of two-thirds of the Preferred Stock, voting as a single class,
following notice to such holders at least 30 days prior to the filing of a
registration statement with the Securities and Exchange Commission relating to
such initial public offering. In addition, in connection with any such initial
public offering, unless the holders of two-thirds of the Preferred Stock shall
have opposed such initial public offering as aforesaid, the holders of the
Preferred Stock shall not have a separate vote as a single class with respect to
amendments to the Certificate of Incorporation in connection with such initial
public offering to increase the authorized Common Stock, create a class of
undesignated Preferred Stock, or effect a stock split, which amendments are
proposed in connection with such initial public offering.
Notwithstanding any other provision herein, the requirement of the approval
of the holders of two-thirds of the holders of Preferred Stock in this Section 6
shall not be amended or modified without the unanimous approval of the holders
of Preferred Stock.
Section 7. Reacquired Shares. Any shares of Preferred Stock purchased
-----------------
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
Section 8. Status of Converted or Redeemed Stock. In the event any
-------------------------------------
shares of Preferred Stock shall be redeemed or converted, the shares so
converted or redeemed shall be canceled and shall not have the status of
authorized but unissued shares of Preferred and shall not be issuable by the
corporation and the Certificate of Incorporation of this corporation shall be
amended to effect the corresponding reduction in the corporation's capital
stock.
ARTICLE V
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The Corporation is to have perpetual existence.
ARTICLE VI
The election of directors need not be by written ballot unless a
stockholder demands election by written ballot at a meeting of stockholders and
before voting begins or unless the Bylaws of the Corporation shall so provide.
ARTICLE VII
The number of directors which constitute the whole Board of Directors of
the Corporation shall be designated in the Bylaws of the Corporation.
ARTICLE VIII
In furtherance and not in limitation of the powers conferred by the laws of
the State of Delaware, the Board of Directors is expressly authorized to adopt,
alter, amend or repeal the Bylaws of the Corporation.
ARTICLE IX
(A) No director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except for any matter in respect of which such director (1) shall be liable
under Section 174 of the General Corporation Law of the State of Delaware or any
amendment thereto or successor provision thereto, or (2) shall be liable by
reason that, in addition to any and all other requirements for liability, he:
(i) shall have breached his duty of loyalty to the Corporation
or its stockholders;
(ii) shall not have acted in good faith or, in failing to act,
shall not have acted in good faith;
(iii) shall have acted in a manner involving intentional
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended
after the date hereof to authorize corporate action further eliminating or
limiting the personal liability of directors,
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then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as so amended.
(B) The Corporation shall indemnify to the fullest extent permitted
under and in accordance with the laws of the State of Delaware any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
(C) Expenses incurred in defending a civil, criminal, administrative
or investigative action, suit or proceeding shall (in the case of any action,
suit or proceeding against a director of the Corporation) or may (in the case of
any action, suit or proceeding against an officer, employee or agent) be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board upon receipt of an undertaking by or on
behalf of the indemnified person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article IX.
(D) The indemnification and other rights set forth in this Article IX
shall not be exclusive of any provisions with respect thereto in the By-Laws or
any other contract or agreement between the Corporation and any officer,
director, employee or agent of the Corporation.
(E) Neither the amendment nor repeal of this Article IX, paragraph
(B), (C) or (D), nor the adoption of any provision of this Certificate of
Incorporation inconsistent with Article IX, paragraph (B), (C) or (D), shall
eliminate or reduce the effect of this Article IX, paragraphs (B), (C) or (D),
in respect of any matter occurring before such amendment, repeal or adoption of
an inconsistent provision or in respect of any cause of action, suit or claim
relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this Article IX,
paragraph (B), (C) or (D), if such provision had not been so amended or repealed
or if a provision inconsistent therewith had not been so adopted.
ARTICLE X
At the election of directors of the Corporation, each holder of stock of
any class or series shall be entitled to one vote for each share held. No
stockholder will be permitted to cumulate votes at any election of directors.
ARTICLE XI
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Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the laws of the State of Delaware)
outside of 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 Bylaws of the Corporation.
ARTICLE XII
Effective upon the Initial Public Offering (as defined in Article IV
Section 3(b)(i) above), the stockholders of the corporation may not take action
by written consent without a meeting but must take such action at a duly called
annual or special meeting of stockholders.
ARTICLE XIII
Subject to the limitations set forth herein, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by the
laws of the State of Delaware, and all rights conferred herein are granted
subject to this reservation."
***
THIRD: The foregoing amendment was approved by the holders of the
requisite number of shares of said Corporation in accordance with Section 228 of
the Delaware General Corporation Law.
FOURTH: That said amendments were duly adopted in accordance with the
provisions of Sections 242 and 245 of the Delaware General Corporation Law.
We hereby further declare and certify under penalty of perjury under the
laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of our own knowledge and that this certificate
is our act and deed.
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IN WITNESS WHEREOF, we have executed and subscribed to this Certificate and
do hereby affirm the foregoing as true under the penalties of perjury this ____
day of January, 1997.
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Peter R. Ellis, President
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Mark W. Lorimer, Secretary