-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PC0VwhPhR54lLKVQTeCgmM7NdXk00TmsFdinVT0u2+hHxHs3dOQs/76mSWYn3Dib MgSiPTSCXk/CgRlUFbToHA== 0000950135-01-502089.txt : 20010720 0000950135-01-502089.hdr.sgml : 20010720 ACCESSION NUMBER: 0000950135-01-502089 CONFORMED SUBMISSION TYPE: 8-A12B PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLYMEDICA CORP CENTRAL INDEX KEY: 0000878748 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043033368 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-A12B SEC ACT: SEC FILE NUMBER: 001-13690 FILM NUMBER: 1684354 BUSINESS ADDRESS: STREET 1: 11 STATE ST CITY: WOBURN STATE: MA ZIP: 01801 BUSINESS PHONE: 6179332020 MAIL ADDRESS: STREET 1: 11 STATE STREET CITY: WOBURN STATE: MA ZIP: 01801 FORMER COMPANY: FORMER CONFORMED NAME: POLYMEDICA INDUSTRIES INC DATE OF NAME CHANGE: 19930328 8-A12B 1 b40001pce8-a12b.txt POLYMEDICA CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-A For Registration of Certain Classes of Securities Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 PolyMedica Corporation ----------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3033368 ----------------------- ----------------- (State of incorporation Employer or organization) Identification No.) 11 State Street, Woburn, Massachusetts 01801 --------------------------------------------------- (Address of principal executive offices) (Zip Code) If this form relates to the If this form relates to the registration of a class of registration of a class of securities pursuant to securities pursuant to Section 12(b) of the Exchange Section 12(g) of the Exchange Act and is effective pursuant Act and is effective pursuant to General Instruction A.(c), to General Instruction A.(d), please check the following box.[ x ] please check the following box.[ ] Securities Act registration statement file number to which this form relates: n/a --------------- (If applicable) Securities to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which to be so Registered Each Class is to be Registered ------------------- ------------------------------ Common Stock, $.01 par value per share New York Stock Exchange Securities to be registered pursuant to Section 12(g) of the Act: None 2 Item 1: Description of Registrant's Securities to be Registered. -------------------------------------------------------- Polymedica Corporation (the "Company") is authorized to issue 50,000,000 shares of Common Stock, $.01 par value per share ("Common Stock") and 2,000,000 shares of Preferred Stock, $.01 par value per share ("Preferred Stock"). The following summary is qualified by reference to the provisions of applicable law and the Company's Restated Articles of Organization and By-laws, each as amended to date, incorporated herein by reference. Common Stock Holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Accordingly, holders of a majority of the shares of Common Stock entitled to vote in any election of directors may elect all of the directors standing for election. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefor, subject to any preferential dividend rights of outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to receive ratably the net assets of the Company available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding Preferred Stock. Holders of Common Stock have no preemptive, subscription, redemption or conversion rights. The outstanding shares of Common Stock are fully paid and nonassessable. The rights, preferences and privileges of holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of Preferred Stock which the Company may designate and issue in the future. Preferred Stock Pursuant to the Company's Restated Articles of Organization, the Company's Board of Directors is authorized, subject to any limitations prescribed by law, without further stockholder approval, to issue such shares of Preferred Stock in one or more series. Each such series of Preferred Stock shall have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Board of Directors. The Company's Board of Directors has authority to designate and issue Preferred Stock and to determine its rights and preferences to eliminate delays associated with a stockholder vote on specific issuances. The issuances of Preferred Stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of the outstanding voting stock of the Company. Massachusetts Law and Certain Charter and By-Law Provisions Under Chapter 110F of the Massachusetts General Laws, a Massachusetts corporation with more than 200 stockholders may not engage in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person becomes an interested stockholder, unless (i) the interested stockholder obtains the approval of the Board of Directors prior to becoming an interested stockholder, (ii) the interested stockholder acquires 90% of the outstanding voting stock of the corporation (excluding shares held by certain affiliates of the corporation) at the time it becomes an interested stockholder or (iii) the business combination is approved by both the Board of Directors and the holders of two-thirds of the outstanding voting stock of the corporation (excluding shares held by the interested stockholder). An "interested stockholder" is a person who, together with affiliates and associates, owns (or at any time within the prior three years did own) 5% or more of the outstanding voting stock of the 3 corporation. A "business combination" includes a merger, a stock or asset sale, and certain other specified transactions resulting in a financial benefit to the interested stockholder. Massachusetts General Laws Chapter 156B, Section 50A requires that publicly held Massachusetts corporations have a classified board of directors consisting of three classes as nearly equal in size as possible. In accordance with such law, the Company's Restated Articles of Organization provide for the division of the Board of Directors into three class as nearly equal in size as possible with staggered three-year terms. The classification of the Board of Directors could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring control of the Company. The By-Laws of the Company include a provision which excludes the Company from the applicability of Massachusetts General Laws Chapter 110D, entitled "Regulation of Control Share Acquisitions". In general, this statute provides that any stockholder of a corporation subject to this statute who acquires 20% or more of the outstanding voting stock of a corporation subject to the statute may not vote such stock unless stockholders of the corporation so authorize. The Board of Directors may amend the Company's By-Laws at any time to subject the Company to this statute prospectively. Certain of the provisions of Massachusetts law and the Company's Restated Articles of Organization would make more difficult or discourage a proxy contest or the assumption of control by a holder of a substantial block of the Company's stock or the removal of the incumbent Board of Directors. Such provisions could also have the effect of discouraging a third party from making a tender offer or otherwise attempting to obtain control of the Company, even though such an attempt might be beneficial to the Company and its stockholders. In addition, such provisions could tend to reduce the temporary fluctuations in the market price of the Company's stock which are caused by accumulations of stock. Accordingly, stockholders could be deprived of certain opportunities to sell their stock at a temporarily higher market price. The Restated Articles of Organization of the Company contain a provision authorizing a class of preferred stock whose terms are not defined in the Articles but whose terms may be fixed by the Board of Directors without further shareholder approval. The Restated Articles of Organization provide that the directors and officers of the Company shall be indemnified by the Company to the fullest extent authorized by Massachusetts law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred in connection with service for or on behalf of the Company. In addition, the Restated Articles of Organization provide that the directors of the Company will not be personally liable for monetary damages to the Company for certain breaches of their fiduciary duty as directors, unless they violated their duty of loyalty or acted in bad faith. The Company's Restated Articles of Organization also provide that directors may only be removed for cause and that the amendment of the provisions providing for the elimination of personal liability and indemnification of directors and officers must be approved by the vote of two-thirds of the outstanding voting stock. 4 The Company's By-Laws also provide that special meetings of stockholders may only be called by the Chairman of the Board, the President, the Chief Executive Officer or a majority of the Board of Directors. In addition, the By-Laws contain provisions requiring stockholders who wish to introduce matters at a stockholders meeting to provide written notice well in advance of any annual or special meeting of stockholders. Shareholder Rights Agreement The Board of Directors adopted on January 23, 1992, a Shareholder Rights Agreement between the Company and The First National Bank of Boston, as Rights Agent (the "Shareholder Rights Agreement") which includes terms substantially similar to those described below. The Shareholder Rights Agreement was amended on December 9, 1999. The following summary description of the Shareholder Rights Agreement, as amended, does not purport to be complete. A copy of the Shareholder Rights Agreement is incorporated herein by reference to the Company's Current Report on Form 8-K filed on March 13, 1992 (File No. 033-45425). A copy of the amendment to the Shareholder Rights Agreement is incorporated by reference herein to the Company's Quarterly Report on Form 10-Q filed on February 14, 2000 (File No. 001-13690). The Shareholder Rights Agreement became effective immediately following the closing of the Company's initial public offering. On March 13, 1992, the Board of Directors declared a dividend distribution of one preferred stock purchase right (a "Right") for each share of Common Stock outstanding as of the close of business on such date. Each Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A Junior Participating Preferred Stock at a cash exercise price to be determined by the Board of Directors. Each one one-hundredth of a share of Series A Junior Participating Preferred Stock is designed to approximate the value of share of Common Stock. Initially, the Rights are attached to all Common Stock certificates and are not be exercisable. The Rights will become freely tradable and exercisable upon the earlier of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the Company's outstanding shares of Common Stock (or 20% or more of the Company's outstanding Common Stock, in the case of SAFECO and its affiliates (collectively, "SAFECO")), or (ii) 10 business days following the commencement of a tender offer or exchange offer that would result in a person or group beneficially owning 15% (or in the case of SAFECO, 20%) or more of the outstanding shares of Common Stock. The Board of Directors may, in its sole discretion, decrease such threshold amounts from 15% to 10%. In the event that (i) the Company is the surviving corporation in a merger with an Acquiring Person and its Common Stock is not changed or exchanged, or (ii) an Acquiring Person becomes the beneficial owner of more than 15% (or, in the case of SAFECO, 20%) of the then outstanding shares of Common Stock, except pursuant to an offer for all outstanding shares of Common Stock which the independent directors determine to be fair to, and otherwise in the best interest of, shareholders, each holder of a Right will thereafter have the right to receive, upon exercise, that number of shares of Common Stock that equals the result obtained by dividing (x) by (y), where (x) is equal to the then current Purchase Price (as defined in the Shareholder Rights Agreement) multiplied by the then number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable immediately prior to the occurrence of such an event, and (y) is equal to one-half of the current market price (as defined in the Shareholder Rights Agreement) of the Common Stock at the date of the occurrence of the event. Notwithstanding any of the foregoing, following the occurrence of any of the events set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Shareholder Rights Agreement) were, beneficially owned by any Acquiring person will be null and void. 5 In the event that, at any time following the Stock Acquisition Date (as defined in the Shareholder Rights Agreement), (i) the Company is acquired in a merger or other business combination transaction in which the Company is not the surviving corporation or its Common Stock is changed or exchanged (other than a merger which follows an offer determined by the Board to be fair as described in Clause (ii) of the preceding paragraph), or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) shall thereafter have the right to receive, upon exercise, that number of shares of common stock of the acquiring company that equals the result obtained by dividing (x) by (y), where (x) is equal to the then current Purchase Price multiplied by the number of one one-hundredths of a share of Preferred Stock for which a Right is exercisable immediately prior to the occurrence of such event, and (y) is equal to one-half of the current market price (as defined in the Rights Agreement) of such common stock at the date of the occurrence of the event. The Company will generally be entitled to redeem the Rights at $.01 per share (the "Redemption Price" at any time until the tenth day following public announcement that a 15% (or, in the case of SAFECO, 20%) stock position has been acquired. Immediately upon the action of the Board to redeem the Rights, the right to exercise the Rights will terminate and any right of the holders of Rights will be to receive the Redemption Price. The Rights will expire on January 23, 2002 unless earlier redeemed or exchanged. The Rights do not provide any rights associated with stock ownership in the Company, such as the right to vote or to receive dividends. The Company may, subject to certain limitations, supplement or amend the Shareholder Rights Agreement without the consent or agreement of any holders of Rights or any other person. The Rights will have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company on terms not approved by the Board of Directors. Item 2: Exhibits. --------- The following exhibits are filed herewith (or incorporated by reference as indicated below): 1. Restated Articles of Organization of the Registrant, as amended. 2. Restated Bylaws of the Registrant, as amended. 6 SIGNATURE Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized. PolyMedica Corporation By: /s/Eric G. Walters ----------------------------- Eric G. Walters Executive Vice President July 18, 2001 EX-1 2 b40001pcex1.txt RESTATED ARTICLES OF ORGINIZATION 1 Exhibit 1 Form CD-74-10M-10-79-152328 The Commonwealth of Massachusetts MICHAEL JOSEPH CONNELLY FEDERAL IDENTIFICATION Secretary of State NO. 04-3033368 ONE ASHBURTON PLACE, BOSTON, MASS. 02108 RESTATED ARTICLES OF ORGANIZATION General Laws, Chapter 156B, Section 74 This certificate must be submitted to the Secretary of the Commonwealth within sixty days after the date of the vote of stockholders adopting the restated articles of organization. The fee for filing this certificate is prescribed by General Laws, Chapter 156B, Section 114. Make check payable to the Commonwealth of Massachusetts. We, Steven J. Lee , President, and Eric Walters, Clerk, of PolyMedica Industries, Inc. located at 2 Constitution Way, Woburn, Massachusetts 01801 do hereby certify that the following restatement of the articles of organization of the corporation was duly adopted at a meeting held on January 21, 1992, by vote of [See Attachment A.] _________ shares of _____________________ out of __________ shares outstanding, (Class of Stock) ________ shares of ____________________ out of _________ shares outstanding, and (Class of Stock) ________ shares of ____________________ out of __________ shares outstanding, (Class of Stock) being at least two-thirds of each class of stock outstanding and entitled to vote and of each class or series of stock adversely affected thereby: - 1. The name by which the corporation shall be known is: PolyMedica Industries, Inc. 2. The purposes for which the corporation is formed are as follows: To research, develop, create, manufacture, test, program, distribute, market, sell, license, sublicense and engineer health care and cosmetic technologies and products and to carry on any business permitted by the laws of the Commonwealth of Massachusetts to a corporation organized under Chapter 156B of the Massachusetts General Laws. 2 3. The total number of shares and the par value, if any, of each class of stock which the corporation is authorized to issue is as follows: WITHOUT PAR VALUE WITH PAR VALUE CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE Preferred 3,112,164 $.01 Common 20,000,000 $.01 *4. If more than one class is authorized, a description of each of the different classes of stock with, if any, the preferences, voting powers, qualifications, special or relative rights or privileges as to each class thereof and any series now established: See Continuation Sheet 4A attached hereto. *5. The restrictions, if any, imposed by the articles of organization upon the transfer of shares of stock of any class are as follows: None. *6. Other lawful provisions, if any, for the conduct and regulation of the business and affairs of the corporation, for its voluntary dissolution, or for limiting, defining or regulating the powers of the corporation, or of its directors or stockholders, or of any class of stockholders: See Continuation Sheet 6A. *If there are no such provisions, state "None". 3 Attachment A 484,272 shares of Common Stock out of 504,892 shares outstanding 87,100 shares of Series A Preferred Stock out of 87,100 shares outstanding 522,876 shares of Series B Preferred Stock out of 522,876 shares outstanding 495,284 shares of Series C Preferred Stock out of 502,188 shares outstanding 4 CONTINUATION SHEET 4A PREFERENCES, VOTING POWERS, QUALIFICATIONS AND SPECIAL OR RELATIVE RIGHTS AND PRIVILEGES OF THE CLASSES OF CAPITAL STOCK OF POLYMEDICA INDUSTRIES, INC. 1. COMMON STOCK Section 1.1. Voting Rights. The holders of shares of Common Stock shall be entitled to one vote for each share so held with respect to all matters voted on by the shareholders of the corporation, subject in all cases to the provisions of this Article 4. Section 1.2. Liquidation Rights. Subject to the prior and superior rights of any then outstanding Preferred Stock, upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation, after payment shall have been made to the holders of any then outstanding Preferred Stock of the full amount to which they are entitled, the holders of Common Stock shall be entitled to receive the remaining funds to be distributed. Such funds shall be paid to the holders of Common Stock on the basis of the number of shares of Common Stock held by each of them. Section 1.3. Dividends. Dividends may be paid on the Common Stock as and when declared by the Board of Directors; provided, however, that no cash dividends may be declared or paid on the Common Stock unless dividends shall first have been declared as paid with respect to any then outstanding Preferred Stock, as provided in this Article 4. 2. UNDESIGNATED PREFERRED STOCK Up to 2,000,000 shares of Preferred Stock (the "Undesignated Preferred Stock") may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the vote or votes providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any such shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided. Authority is hereby granted to the Board of Directors from time to time to issue the Undesignated Preferred Stock in one or more series, and in connection with the creation of any such series, by vote or votes providing for the issue of the shares thereof, to determine and fix such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional, or other special rights, and qualifications, limitations or restrictions thereof, including without limitation, thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such votes, all to the full extent now or hereafter permitted by Chapter 156B of the Massachusetts General Laws. Without limiting the generality of the foregoing, the votes providing for issuance of any such series of Undesignated Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Undesignated Preferred Stock of any other series of any 5 Designated Preferred Stock to the extent permitted by law and subject to the terms of previously issued and then outstanding series of Undesignated Preferred Stock or Designated Preferred Stock. Except as specifically provided in this Amended and Restated Articles of Organization, no vote of the holders of Undesignated Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Undesignated Preferred Stock authorized by and complying with the conditions of this Amended and Restated Articles of Organization, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation. 3. DESIGNATED PREFERRED STOCK In addition to the 2,000,000 shares of Undesignated Preferred Stock described in Section 2 above, which may be issued in one or more series, there are authorized and designated three series of Designated Preferred Stock. Eighty Seven Thousand One Hundred (87,100) shares of the authorized and issued Preferred Stock of the Corporation have been previously designated as "Series A Preferred Stock". Five Hundred Twenty-Two Thousand Eight Hundred Seventy Six (522,876) shares of the authorized and issued Preferred Stock of the Corporation have been previously designated "Series B Preferred Stock". Five Hundred Twenty Thousand (520,000) shares of the Preferred Stock of the Corporation have been previously designated "Series C Preferred Stock" and such designation is hereby amended to reduce the number of Series C Preferred Stock to Five Hundred Two Thousand One Hundred Eighty Eight Thousand (502,188) shares, all of which are currently issued and outstanding. 4. SERIES A AND SERIES B PREFERRED STOCK Section 4.1. Rights and Preferences. The Series A Preferred Stock and Series B Preferred Stock shall have the rights, preferences, powers, privileges and restrictions, qualifications and limitations as set forth in this Section 4. Section 4.2. Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation, (a) the holders of each share of Series C 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, by reason or their ownership thereof, an amount equal to $8.69 per share, plus an amount equal to all declared but unpaid dividends to and including the date full payment shall be tendered to the holders of the Series C Preferred Stock with respect to such liquidation, dissolution or winding up; (b) after payment of all preferential amounts to be paid to the holders of Series C Preferred Stock, the holders of each share 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, by reason of their ownership thereof, an amount equal to $4.59 per share, plus an amount equal to all declared but unpaid dividends to and including the date full payment shall be tendered to the holders of the Series A Preferred Stock with respect to such liquidation, dissolution or winding up; and (c) after payment of all preferential amounts to be paid to the holders of Series C Preferred Stock and the holders of Series A Preferred Stock, the holders of each share 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, by reason of their ownership thereof, an amount equal to $4.59 per share, plus an amount equal to all declared but unpaid dividends to and including the date full payment shall -4A-2 of 26 pages- 6 be tendered to the holders of the Series B Preferred Stock with respect to such liquidation, dissolution or winding up. All of the preferential amounts to be paid to the holders of the Series C Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock pursuant to this Section 4.2 shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any assets of the corporation to, the holders of any other series of Preferred Stock or to the holders of the Common Stock in connection with such liquidation, dissolution or winding up. After the payment or the setting apart of payment to the holders of the Series C Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock of the preferential amounts so payable to them, the holders of Common Stock shall be entitled to receive all remaining assets of the corporation. If the assets or surplus funds to be distributed to the holders of any series of Preferred Stock pursuant to this Section 4.2 are insufficient to permit the payment to such holders of their full preferential amount, the assets and surplus funds legally available for distribution shall be distributed ratably among the holders of such series of Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive. A consolidation or merger of the corporation or a sale of all or substantially all of the assets of the corporation shall be regarded as a liquidation, dissolution or winding up of the affairs of the corporation within the meaning of this Section 4.2; provided, however, that each holder of any such series of Preferred Stock shall have the right to elect the benefits of the provisions of Section 4.3(d)(vii) hereof in lieu of receiving payment in liquidation, dissolution or winding up of the corporation pursuant to this Section 4.2. Section 4.3. Conversion. The holders of the Series A Preferred Stock and Series B Preferred Stock shall have conversion rights as follows (as used in this Section 4, the "Conversion Rights"): (a) Right to Convert. Each share of Series A Preferred Stock and Series B Preferred Stock shall be convertible at the option of the holder thereof at any time after the date of issuance and without the payment of any additional consideration therefor into that number of fully paid and nonassessable shares of Common Stock as is determined by dividing $4.59 by the Conversion Price for such series of Preferred Stock. The "Conversion Price" for any series of Preferred Stock is the price at which shares of Common Stock shall be deliverable upon conversion of any shares of such series of Preferred Stock (determined as hereinafter provided) in effect at the time of conversion. The Conversion Price of the Series A Preferred Stock and Series B Preferred Stock shall initially be $4.59 per share of Common Stock. The initial Conversion Price for the Series A Preferred Stock and Series B Preferred Stock shall be subject to adjustment (in order to adjust the number of shares of Common Stock into which the corresponding series of Preferred Stock is convertible) as hereinafter provided. Each person so converting shares of Series A Preferred Stock or Series B Preferred Stock shall be entitled to all declared but unpaid dividends up to the time of the conversion. Such dividends shall be calculated pursuant to Section 4.6 hereof and shall be paid to each such person within thirty (30) days of the date of conversion in cash or, at the option of the corporation, by the issuance of additional shares of Common Stock at the Conversion Price in effect at the time of conversion. -4A-3 of 26 pages- 7 (b) Automatic Conversion. Each share of Series A Preferred Stock and Series B Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Price for such series upon the closing of a firm commitment 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 public offering price of at least $13.77 per share [with such amount to be appropriately adjusted in the event of any stock dividend, stock distribution or subdivision as provided in Section 4.3(d)(vi) hereof] and having an aggregate offering price to the public resulting in gross proceeds to the corporation of not less than $5,000,000. The person(s) entitled to receive Common Stock issuable upon such conversion of any such Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of such offering. Each person who holds of record such Preferred Stock immediately prior to such automatic conversion shall be entitled to all declared but unpaid dividends up to the time of the automatic conversion. Such dividends shall be calculated pursuant to Section 4.6 hereof and shall be paid to all such holders within thirty (30) days of the automatic conversion in cash or, at the option of the corporation, by the issuance of additional shares of Common Stock at the Conversion Price in effect at the time of conversion. (c) Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of Series A Preferred Stock or Series B 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 effective Conversion Price for any such Preferred Stock being converted. Before any holder of any such Preferred Stock shall be entitled to convert the same into full shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the corporation or of any transfer agent for such Preferred Stock, and shall give written notice to the corporation at such office that he elects to convert the same and shall state therein his name or the name or names of his nominees in which he wishes the certificate or certificates for shares of Common Stock to be issued, together with the applicable federal taxpayer identification number. The corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of such Preferred Stock, or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled, together with cash in lieu of any fraction of a share. 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 such Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. (d) Adjustment to Conversion Price for Diluting Issues: (i) Special Definitions. For purposes of this Section 4.3(d), the following definitions shall apply: (1) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities other than options or warrants issued to officers, directors or employees of, or consultants to, the corporation and approved by the Board of Directors and a -4A-4 of 26 pages- 8 majority of the directors designated for election or elected by the holders of one or more series of Preferred Stock. (2) "Original Issue Date" for the Series A Preferred Stock and Series B Preferred Stock shall mean the respective date on which the first share of such series of Preferred Stock was issued. (3) "Convertible Securities" shall mean any evidences of indebtedness, shares (other than Common Stock, Series A Preferred Stock and Series B Preferred Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock. (4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 4.3(d)(iii) hereof, deemed to be issued) by the corporation after the Original Issue Date, other than shares of Common Stock issued or issuable: (A) upon conversion of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock; (B) to officers, directors or employees of, or consultants to, the corporation pursuant to action by the Board of Directors prior to the Original Issue Date, and pursuant to a stock purchase or option plan or other employee or director stock incentive or compensation program (collectively, the "Plans") approved by the Board of Directors and a majority of the directors designated for election or elected by the holders of one or more series of Preferred Stock; or (C) by way of dividend or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (A) and (B) or this clause (C) or on shares of Common Stock so excluded. (ii) No Adjustment of Conversion Price. No adjustment in the number of shares of Common Stock into which the Series A Preferred Stock or the Series B Preferred Stock is convertible shall be made by adjustment in the Conversion Price of such series of Preferred Stock in respect of the issuance of Additional Shares of Common Stock or otherwise, unless the consideration per share for such Additional Shares of Common Stock issued or deemed to be issued by the corporation is less than the respective Conversion Price of such series of Preferred Stock in effect on the date of, and immediately prior to, the issue of such Additional Shares. The holders of Series A Preferred Stock and Series B Preferred Stock waive any and all rights (which may have been previously waived by such holders pursuant to Section 10.4 of the Series C Preferred Stock Purchase Agreement dated May 7, 1991) to adjustment of the Conversion Price pursuant to this Section 4.3(d) which they have by virtue of the Company's Restated Articles of Organization, as amended, with respect to the issuance of a Common Stock Purchase Right dated June 15, 1990 (the "Right") to Technology Funding -4A-5 of 26 pages- 9 Partners III, L.P. ("Technology Funding") or to the issuance of any shares of Common Stock to Technology Funding upon the exercise or exercises of such Right. (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. (1) Options and Convertible Securities. In the event the corporation at any time or from time to time after the Original Issue Date of the Series A Preferred Stock and the Series B Preferred Stock 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 for purposes of any adjustment under this Section 4.3(d) with respect to such series, 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) 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 Stock issued as of the time of such issue or, in the case such a record date shall have been fixed, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 4.3(d)(v) hereof) of such Additional Shares of Common Stock would be less than the respective Conversion Price of 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 Stock are deemed to be issued: (A) no further adjustment in such Conversion Price 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 or otherwise, for any increase in the consideration payable to the corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of such series of Preferred Stock computed upon the original issue of such Options or Convertible Securities (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price of such series of Preferred Stock computed upon the original issue of such Options or Convertible -4A-6 of 26 pages- 10 Securities (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based thereon shall, upon such expiration, be recomputed as if: (I) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the 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 such 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 (II) 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 stock deemed to have been then issued was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the corporation [determined pursuant to Section 4.3(d)(v) hereof] upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (D) no recomputation pursuant to clause (B) or (C) above shall have the effect of increasing such Conversion Price to an amount which exceeds the lower of (i) the Conversion Price of such series of Preferred Stock on the original adjustment date, or (ii) the Conversion Price of such series of Preferred Stock that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; (E) in the case of any Options which expire by their terms not more than thirty (30) days after the date of issue thereof, no adjustment of such Conversion Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in clause (C) above; and (F) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in such Conversion Price which became effective on such record date shall be cancelled as of the close of business -4A-7 of 26 pages- 11 on such record date, and thereafter such Conversion Price shall be adjusted pursuant to this Section 4.3(d)(iii) as of the actual date of their issuance. (2) Stock Dividends, Stock Distributions and Subdivisions. In the event the corporation at any time or from time to time after the Original Issue Date of the Series A Preferred Stock or the Series B Preferred Stock shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock, or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, for purposes of any adjustment under this Section 4.3(d) with respect to such series, Additional Shares of Common Stock shall be deemed to have been issued: (A) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or (B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective. If such record date shall have been fixed and such dividend shall not have been fully paid on the date fixed therefor, the adjustment previously made in the respective Conversion Price for such series of Preferred Stock which became effective on such record date shall be cancelled as of the close of business on such record date, and thereafter such Conversion Price shall be adjusted pursuant to this Section 4.3(d)(iii) as of the time of actual payment of such dividend. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the corporation shall issue Additional Shares of Common Stock [including Additional Shares of Common Stock deemed to be issued pursuant to Section 4.3(d)(iii) hereof, but excluding Additional Shares of Common Stock issued pursuant to Section 4.3(d)(iii)(2), which event is dealt with in Section 4.3(d)(vi)] without consideration or for a consideration per share less than the Conversion Price of the Series A Preferred Stock or the Series B Preferred Stock in effect on the date of and immediately prior to such issue, then and in such event, such Conversion Price shall be reduced, concurrently with such issue in order to increase the number of shares of Common Stock into which such series of Preferred Stock is convertible to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction (x) the number of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue (including shares of Common Stock issuable upon conversion of any outstanding Series A Preferred Stock, Series B Preferred Stock or Convertible Securities and upon the exercise of any Options), plus (B) the number of shares of Common Stock which the aggregate consideration received by the corporation for the total number of Additional Shares of Common Stock so issued would purchase at -4A-8 of 26 pages- 12 such Conversion Price, and (y) the denominator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue (including shares of Common Stock issuable upon conversion of any outstanding Series A Preferred Stock, Series B Preferred Stock or Convertible Securities and upon the exercise of any Options), plus (B) the number of such Additional Shares of Common Stock so issued, provided that such Conversion Price shall not be so reduced at such time if the amount of such reduction would be an amount less than $0.05, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.05 or more. (v) Determination of Consideration. For purposes of this Section 4.3(d), the consideration received by the corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Cash and Property: Such consideration shall: (A) 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; (B) 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 by the Board of Directors; and (C) in the event Additional Shares of Common Stock 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 (A) and (B) above, as determined in good faith by the Board of Directors. (2) Options and Convertible Securities. The consideration per share received by the corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4.3(d)(iii)(1) above, relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the corporation as consideration for the issue of such Options or Convertible Securities, plus 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 until such subsequent adjustment occurs) 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, by -4A-9 of 26 pages- 13 (y) 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 until such subsequent adjustment occurs) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (vi) Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidation of Common Stock. (1) Stock Dividends, Distributions or Subdivisions. In the event the corporation shall issue Additional Shares of Common Stock pursuant to Section 4.3(d)(iii)(2) hereof in a stock dividend, stock distribution or subdivision, the respective Conversion Price of the Series A Preferred Stock and the Series B Preferred Stock in effect immediately prior to such stock dividend, stock distribution or subdivision shall, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, be proportionately decreased. (2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the respective Conversion Price of the Series A Preferred Stock and the Series B Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. -4A-10 of 26 pages- 14 (vii) Adjustment for Merger or Reorganization. In case of any consolidation or merger of the corporation with or into another corporation or the conveyance of all or substantially all of the assets of the corporation to another corporation, each share of Series A Preferred Stock and each share of Series B Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of such series of Preferred Stock would have been entitled upon such consolidation, merger or conveyance. In any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the holders of such series of Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the respective Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of such series of Preferred Stock. Each holder of such series of Preferred Stock upon the occurrence of a capital reorganization, merger or consolidation of the corporation or the sale of all or substantially all its assets and properties as such events are more fully set forth in the first paragraph of this Section 4.3(d)(vii), shall have the option of electing treatment of his shares of such series of Preferred Stock under either this Section 4.3(d)(vii) or Section 4.2 hereof, notice of which election shall be submitted in writing to the corporation at its principal offices no later than five (5) days before the effective date of such event. (e) No Impairment. The corporation will not, by amendment of these Articles of Organization or through any reorganization, transfer of assets, consolidation, merger, dissolution issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 4.3 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Series A Preferred Stock and Series B Preferred Stock against impairment. (f) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the respective Conversion Price of the Series A Preferred Stock or the Series B Preferred Stock, pursuant to this Section 4.3, the corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of 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 such series of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the respective Conversion Price of such series of Preferred Stock 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 such series of Preferred Stock. (g) Notices of Record Date. In the event of (i) any taking by the corporation of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any capital -4A-11 of 26 pages- 15 reorganization of the corporation, any reclassification or recapitalization of the capital stock of the corporation, any merger or consolidation of the corporation, and any transfer of all or substantially all of the assets of the corporation to any other corporation, or any other entity or person, or any voluntary or involuntary dissolution, liquidation or winding up of the corporation, the corporation shall mail to each holder of the Series A Preferred Stock and each holder of the Series B Preferred Stock at least ten (10) days prior to the record date specified therein, a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (C) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up. (h) Common Stock Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time to be sufficient to effect conversion of all Series A Preferred Stock and Series B Preferred Stock. (i) No Reissuance. No share of shares of Series A Preferred Stock or Series B Preferred Stock acquired by the corporation by reason of purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from the shares which the corporation shall be authorized to issue. The corporation may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of the Series A Preferred Stock and Series B Preferred Stock. Section 4.4. Voting Rights. (a) The holders of shares of Series A Preferred Stock and the holders of shares of Series B Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote upon any matter submitted to the stockholders for a vote, as though the Common Stock and all such series of Preferred Stock constituted a single class of stock, except with respect to those matters on which the Massachusetts Corporation Law required that a vote must be by a separate class or classes or by separate series, as to which each such class or series shall have the right to vote in accordance with such law, and except as provided in Section 4.4(b) hereof, on the following basis: holders of such series of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock into which each such share of such series of Preferred Stock held by such holder is then convertible. (b) (i) If the corporation shall fail to pay dividends thereon in accordance with Section 4.5 of this Continuation Sheet 4A, then the holders of such series of Preferred Stock shall, upon notice from holders of at least twenty-five percent (25%) of the total outstanding shares of (A) such series of Preferred Stock and (B) all other series of Preferred Stock as to which the corporation shall have failed to pay dividends thereon in accordance with Section 4.5 of this Continuation Sheet 4A, have, in each instance, the right to call a special meeting of stockholders of the Corporation at which the holders of shares of such series (one or more) of -4A-12 of 26 pages- 16 Preferred Stock represented in person or by proxy at such meeting shall have the right, voting as a single class, to elect a sufficient number of directors to the Board of Directors of the corporation so that the directors so elected to the Board of Directors (the "Preferred Directors") represent a majority of the Board. The number of the members of the Board of Directors shall accordingly be increased at the meeting and the Preferred Directors shall seek to expeditiously correct or nullify the action giving rise to their election (an "Initiating Action"), at which time they shall (so long as no other Initiating Action shall have occurred and be continuing) resign or be subject to removal by vote of all of the stockholders of the corporation in accordance with Section 4.4(a) hereof. The contingent rights of the holders of shares of such series of Preferred Stock shall thereupon cease and expire, subject to renewal from time to time upon the same terms and conditions contained herein and the number of the members of the Board of Directors shall be accordingly reduced. (ii) Any directors who shall have been elected by the holders of one or more series of Preferred Stock or by any director so elected as herein contemplated, may be removed at any time prior to correction or nullification of the Initiating Action, either with or without cause, by, and only by, the affirmative votes of the holders of a majority of the outstanding shares of such series of Preferred Stock given at a special meeting of such stockholders called for the purpose, and any vacancy thereby created may be filled during such period by the holders of such series of Preferred Stock, present in person or represented by proxy at such meeting. Any director to be elected by the Board of Directors of the corporation to replace a director elected by holders of such series of Preferred Stock, or elected by a director as in this sentence provided, and who dies, resigns, or otherwise ceases to be a director shall, except as otherwise provided in the preceding sentence, be elected by the remaining directors theretofore elected by the holders of such series of Preferred Stock. (c) The holders of Series A Preferred Stock, the holders of Series B Preferred Stock and the holders of Common Stock shall be entitled to vote upon the election of directors on the following basis: (i) so long as at least 20,000 shares of Series A Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations), the holders of Series A Preferred Stock issued and outstanding shall be entitled to elect one director; and (ii) so long as at least 100,000 shares of Series B Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations), the holders of Series B Preferred Stock issued and outstanding shall be entitled to elect one director. Section 4.5. Dividend Rights. (a) The holders of the then outstanding shares of Series A Preferred Stock and Series B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available therefor, cumulative cash dividends at the annual rate of $0.36 per share, commencing after the first calendar quarter (beginning with the calendar quarter ending June 30, 1990) when the corporation's net after-tax income, calculated in accordance with generally accepted accounting principles, exceeds five times the quarterly pro rata portion of the dividend on all then outstanding shares of Series A Preferred Stock, Series B Preferred Stock and any other series of Preferred Stock entitled to receive dividends other than dividends equal (determined on the basis of the number of shares of Common Stock into which such series of Preferred Stock is then convertible) to any dividend paid on Common Stock. Dividends shall be -4A-13 of 26 pages- 17 cumulative and shall accrue, whether or not declared, from and after such calendar quarter. In addition, the holders of outstanding shares of Series A Preferred Stock and the holders of outstanding shares of Series B Preferred Stock shall be entitled to receive a dividend equal (determined on the basis of the number of shares of Common Stock into which a share of such series of Preferred Stock then is convertible) to any dividend paid on Common Stock. (b) Notwithstanding any provisions in Section 4.5(a) hereof, dividends which have accrued on Series A Preferred Stock or Series B Preferred Stock but have not been paid prior to an automatic conversion pursuant to Section 4.3(b) hereof shall be payable within thirty (30) days of the Closing, as defined in Section 4.3(b), to each record holder of such series of Preferred Stock immediately prior to the automatic conversion. Section 4.6. Covenants. So long as (i) in the case of Series A Preferred Stock, at least 20,000 shares of Series A Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations) or (ii) in the case of Series B Preferred Stock, at least 100,000 shares of the Series B Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations), the corporation shall not, without first obtaining the affirmative vote or written consent of not less than sixty-six and two-thirds percent (66 2/3%) of such outstanding shares of the respective series of Preferred Stock: (a) amend or repeal any provision of, or add any provision to, the corporation's Articles of Organization or By-Laws such action would alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, such series of Preferred Stock generally; provided, however, that the corporation shall not take any such action which would reduce or change the preferences, rights, privileges or powers of or the restrictions provided for the benefit of any series of Preferred Stock without first obtaining the affirmative vote or written consent of not less than sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of such series of Preferred Stock; (b) reclassify any Common Stock into shares having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of such series of Preferred Stock; (c) pay or declare any dividend or distribution on any shares of Common Stock or apply any of its assets to the redemption, retirement, purchase or other acquisition directly or indirectly, through subsidiaries, if any, or otherwise, of any shares of Common Stock except from officers, directors or employees of or consultants to the corporation upon termination of employment or upon termination of any other relationship with the Corporation and except as pursuant to the corporation's rights of first refusal; (d) create any other class or classes of stock or series of Preferred Stock having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of such series of Preferred Stock; or (e) authorize any merger or consolidation of the corporation with or into any other corporation or entity (except into or with a wholly-owned subsidiary corporation with the -4A-14 of 26 pages- 18 requisite shareholder approval), or authorize the sale of substantially all of the assets of the corporation. 5. SERIES C PREFERRED STOCK Section 5.1. Designation. The Series C Preferred Stock shall have the relative rights, preferences, powers, privileges and restrictions, qualifications and limitations thereof as set forth in this Section 5. Section 5.2. Liquidation Rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation, the holders of each share of Series C Preferred Stock shall be entitled to receive, prior and in preference to all preferential amounts to be paid to the holders of Series A Preferred Stock and the holders of Series B Preferred Stock and prior and in preference to any distribution of any of the assets or surplus funds of the corporation, by reason of their ownership of Series C Preferred Stock, an amount equal to $8.69 per share, plus an amount equal to all declared by unpaid dividends to and including the date full payment shall be tendered to the holders of the Series C Preferred Stock with respect to such liquidation, dissolution or winding up. All of the preferential amounts to be paid to the holders of the Series C Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock pursuant to Section 5.2 herein and shall be paid or set apart for payment before the payment or setting apart for payment of any amount for, or the distribution of any assets of the corporation to, the holders of the Common Stock in connection with such liquidation, dissolution or winding up. After the payment or the setting apart of payment to the holders of the Series C Preferred Stock, the holders of the Series A Preferred Stock and the holders of the Series B Preferred Stock of the preferential amounts so payable to them, the holders of Common Stock shall be entitled to receive all remaining assets of the corporation. If the assets or surplus funds to be distributed to the holders of Series C Preferred Stock are insufficient to permit the payment to such holders of their full preferential amount, the assets and surplus funds legally available for distribution shall be distributed ratably among the holders of such series of Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive. A consolidation or merger of the corporation or a sale of all or substantially all of the assets of the corporation shall be regarded as a liquidation, dissolution or winding up of the affairs of the corporation within the meaning of this Section 5.2; provided, however, that each holder of any such series of Preferred Stock shall have the right to elect the benefits of the provisions of Section 5.3(d)(vii) hereof in lieu of receiving payment in liquidation, dissolution or winding up of the corporation pursuant to this Section 5.2. Section 5.3. Conversion. The holders of the Series C Preferred Stock shall have conversion rights as follows (the as used in this Section 5, "Conversion Rights"): (a) Right to Convert. Each share of Series C Preferred Stock shall be convertible at the option of the holder thereof at any time after the date of issuance and without the payment of any additional consideration therefor into that number of fully paid and nonassessable shares of Common Stock as is determined by dividing $8.69 by the Conversion Price for the Series C -4A-15 of 26 pages- 19 Preferred Stock. The "Conversion Price" for Series C Preferred Stock is the price at which shares of Common Stock shall be deliverable upon conversion of any shares of the Series C Preferred Stock (determined as hereinafter provided) in effect at the time of conversion. The Conversion Price shall initially be $8.69 per share of Common Stock. The initial Conversion Price shall be subject to adjustment (in order to adjust the number of shares of Common Stock into which the corresponding series of Preferred Stock is convertible) as hereinafter provided. Each person so converting shares of Series C Preferred Stock shall be entitled to all declared but unpaid dividends up to the time of the conversion. Such dividends shall be calculated pursuant to Section 5.6 hereof and shall be paid to each such person within thirty (30) days of the date of conversion in cash or, at the option of the corporation, by the issuance of additional shares of Common Stock at the Conversion Price in effect at the time of conversion. (b) Automatic Conversion. Each share of Series C Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Price for such series upon the closing of a firm commitment 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 public offering price of at least $13.77 per share [with such amount to be appropriately adjusted in the event of any stock dividend, stock distribution or subdivision as provided in Section 5.3(d)(vi) hereof] and having an aggregate offering price to the public resulting in gross proceeds to the corporation of not less than $5,000,000. The person(s) entitled to receive Common Stock issuable upon such conversion of any such Series C Preferred Stock shall not be deemed to have converted such Series C Preferred Stock until immediately prior to the closing of such offering. Each person who holds of record Series C Preferred Stock immediately prior to such automatic conversion shall be entitled to all declared but unpaid dividends up to the time of the automatic conversion. Such dividends shall be calculated pursuant to Section 5.6 hereof and shall be paid to all such holders within thirty (30) days of the automatic conversion in cash or, at the option of the corporation, by the issuance of additional shares of Common Stock at the Conversion Price in effect at the time of conversion. (c) Mechanics of Conversion. No fractional shares of Common Stock shall be issued upon conversion of Series C 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 effective Conversion Price for any Series C Preferred Stock being converted. Before any holder of Series C Preferred Stock shall be entitled to convert the same into full shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the corporation or of any transfer agent for Series C Preferred Stock, and shall give written notice to the corporation at such office that he elects to convert the same and shall state therein his name or the name of his nominees in which he wishes the certificate or certificates for shares of Common Stock to be issued, together with the applicable federal taxpayer identification number. The corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series C Preferred Stock, or to his nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which he shall be entitled, together with cash in lieu of any fraction of a share. 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 Series C Preferred Stock to be converted, and the person or persons entitled to receive the shares of -4A-16 of 26 pages- 20 Common Stock issuable upon 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 Diluting Issues: (i) Special Definitions. For purposes of this Section 5.3(d), the following definitions shall apply: (1) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities other than option or warrants issued to officers, directors or employees of, or consultant to, the corporation and approved by the Board of Directors and a majority of the directors designated for election or elected by the holders of one or more series of Preferred Stock. (2) "Original Issue Date" shall mean the date on which the first share of Series C Preferred Stock was issued. (3) "Convertible Securities" shall mean any evidences of indebtedness, shares (other than Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock. (4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 5.3(d)(iii) hereof, deemed to be issued) by the corporation after the Original Issue Date, other than shares of Common Stock issued or issuable: (A) upon conversion of shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock; (B) to officers, directors or employees of, or consultants to, the corporation pursuant to action by the Board of Directors prior to the Original Issue Date, and pursuant to a stock purchase or option plan or other employee or director stock incentive or compensation program (collectively, the "Plans") approved by the Board of Directors and a majority of the directors designated for election or elected by the holders of one or more series of Preferred Stock; or (C) by way of dividend or other distribution on shares of Common Stock excluded from the definition of Additional Shares of Common Stock by the foregoing clauses (A) and (B) or this clause (C) or on shares of Common Stock so excluded. (ii) No Adjustment of Conversion Price. No adjustment in the number of shares of Common Stock into which the Series C Preferred Stock is convertible shall be made by adjustment in the Conversion Price in respect of the issuance of Additional Shares of Common Stock or otherwise, unless the consideration per share for such -4A-17 of 26 pages- 21 Additional Shares of Common Stock issued or deemed to be issued by the corporation is less than the Conversion Price in effect on the date of, and immediately prior to, the issue of such Additional Shares. The holders of Series C Preferred Stock waive any and all rights (which may have been waived by such holders pursuant to Section 10.4 of the Series C Preferred Stock Purchase Agreement dated May 7, 1991) to adjustment of the Conversion Price pursuant to this Section 5.3(d) which they have by virtue or the Company's Restated Articles of Organization, as amended, with respect to the issuance of the Right to Technology Funding Partners or to the issuance of any shares of Common Stock to Technology Funding upon the exercise of such Right. (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. (1) Options and Convertible Securities. In the event the 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) 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 Stock 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 of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 5.3(d)(v) hereof) of such Additional Shares of Common Stock would be less than the Conversion Price 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 Stock are deemed to be issued: (A) no further adjustment in such Conversion Price 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 or otherwise, for any increase in the consideration payable to the corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue of such Options or Convertible Securities (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; -4A-18 of 26 pages- 22 (C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price Stock computed upon the original issue of such Options or Convertible Securities (or upon the occurrence of a record date with respect thereto) and any subsequent adjustments based thereon shall, upon such expiration, be recomputed as if: (I) in the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the 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 such 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 (II) 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 Stock deemed to have been then issued was the consideration actually received by the corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the corporation [determined pursuant to Section 5.3(d)(v) hereof] upon the issue of the Convertible Securities with respect to which such Options were actually exercised; (D) no recomputation pursuant to clause (B) or (C) above shall have the effect of increasing such Conversion Price to an amount which exceeds the lower of (i) the Conversion Price on the original adjustment date, or (ii) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date; (E) in the case of any Options which expire by their terms not more than thirty (30) days after the date of issue thereof, no adjustment of such Conversion Price shall be made until the expiration or exercise of all such Options, whereupon such adjustment shall be made in the same manner provided in clause (C) above; and -4A-19 of 26 pages- 23 (F) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in such Conversion Price which became effective on such record date shall be cancelled as of the close of business on such record date, and thereafter such Conversion Price shall be adjusted pursuant to this Section 5.3(d)(iii) as of the actual date of their issuance. (2) Stock Dividends, Stock Distributions and Subdivisions. In the event the corporation at any time or from time to time after the Original Issue Date shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock, or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued: (A) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or (B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective. If such record date shall have been fixed and such dividend shall not have been fully paid on the date fixed therefor, the adjustment previously made in the respective Conversion Price which became effective on such record date shall be cancelled as of the close of business on such record date, and thereafter such Conversion Price shall be adjusted pursuant to this Section 5.3(d)(iii) as of the time of actual payment of such dividend. (iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event the corporation shall issue Additional Shares of Common Stock [including Additional Shares of Common Stock deemed to be issued pursuant to Section 5.3(d)(iii) hereof, but excluding Additional Shares of Common Stock issued pursuant to Section 5.3(d)(iii)(2), which event is dealt with in Section 5.3(d)(vi)] without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then and in each such event, such Conversion Price shall be reduced, concurrently with such issue in order to increase the number of shares of Common Stock into which the Series C Preferred Stock is convertible to a price (calculated to the nearest cent) determined by multiplying such Conversion Price by a fraction (x) the numerator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue (including shares of Common Stock issuable upon conversion of any outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Convertible Securities and upon the exercise of any Options), plus (B) the number of shares of Common Stock which the aggregate consideration received by the corporation for the total number of Additional -4A-20 of 26 pages- 24 Shares of Common Stock so issued would purchase at such Conversion Price, and (y) the denominator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue (including shares of Common Stock issuable upon conversion of any outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Convertible Securities and upon the exercise of any Options), plus (B) the number of such Additional Shares of Common Stock so issued, provided that such Conversion Price shall not be so reduced at such time if the amount of such reduction would be an amount less than $0.05, but any such amount shall be carried forward and reduction with respect thereto made at the time of and together with any subsequent reduction which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.05 or more. (v) Determination of Consideration. For purposes of this Section 5.3(d), the consideration received by the corporation for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Cash and Property: Such consideration shall: (A) 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; (B) 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 by the Board of Directors; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the corporation for consideration which covers both, by the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) Options and Convertible Securities. The consideration per share received by the corporation for Additional Shares of Common Stock deemed to have been issued pursuant to Section 5.3(d)(iii)(1) above, relating to Options and Convertible Securities, shall be determined by dividing (x) the total amount, if any, received or receivable by the corporation as consideration for the issue of such Options or Convertible Securities, plus 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 until such subsequent adjustment occurs) 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 -4A-21 of 26 pages- 25 Securities and the conversion or exchange of such Convertible Securities, by (y) 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 until such subsequent adjustment occurs) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (vi) Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidation of Common Stock. (1) Stock Dividends, Distributions or Subdivisions. In the event the corporation shall issue Additional Shares of Common Stock pursuant to Section 5.3(d)(iii)(2) hereof in a stock dividend, stock distribution or subdivision, the Conversion Price in effect immediately prior to such stock dividend, stock distribution or subdivision shall, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, be proportionately decreased. (2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. -4A-22 of 26 pages- 26 (vii) Adjustment for Merger or Reorganization. In case of any consolidation or merger of the corporation with or into another corporation or the conveyance of all or substantially all of the assets of the corporation to another corporation, each share of Series C Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of Series C Preferred Stock would have been entitled upon such consolidation, merger or conveyance. In any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the holders of Series C Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the conversion of the Series C Preferred Stock. Each holder of Series C Preferred Stock upon the occurrence of a capital reorganization, merger or consolidation of the corporation or the sale of all or substantially all its assets and properties as such events are more fully set forth in the first paragraph of this Section 5.3(d)(vii), shall have the option of electing treatment of his shares of Series C Preferred Stock under either this Section 5.3(d)(vii) or Section 5.2 hereof, notice of which election shall be submitted in writing to the corporation at its principal offices no later than five (5) days before the effective date of such event. (e) No Impairment. The corporation will not, by amendment of its Restated Articles of Organization or through any reorganization, transfer of assets, consolidation, merger, dissolution issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 5.3 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series C Preferred Stock against impairment. (f) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 5.3, the corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C 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 Series C 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 Series C Preferred Stock. (g) Notices of Record Date. In the event of (i) any taking by the corporation of a record date of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any capital reorganization of the corporation, any reclassification or recapitalization of the capital stock of the corporation, any merger or consolidation of the corporation, and any transfer of all or substantially all of the assets of the corporation to any other corporation, or any other entity or -4A-23 of 26 pages- 27 person, or any voluntary or involuntary dissolution, liquidation or winding up of the corporation, the corporation shall mail to each holder of Series C Preferred Stock at least ten (10) days prior to the record date specified therein, a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (C) the time, if any, that is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up. (h) Common Stock Reserved. The corporation shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Series C Preferred Stock. (i) No Reissuance. No share or shares of Series C Preferred Stock acquired by the corporation by reason of purchase, conversion or otherwise shall be reissued, and all such shares shall be cancelled, retired and eliminated from the shares which the corporation shall be authorized to issue. The corporation may from time to time take such appropriate action as may be necessary to reduce the authorized number of shares of the Series C Preferred Stock. Section 5.4. Voting Rights. (a) The holders of shares of Series C Preferred Stock shall be entitled to notice of any stockholders' meeting and to vote upon any matter submitted to the stockholders for a vote, as though the Common Stock and all series of Preferred Stock constituted a single class of stock, except with respect to those matters on which the Massachusetts Corporation Law requires that a vote must be by a separate class or classes or by separate series, as to which each such class or series shall have the right to vote in accordance with such law, and except as provided in Section 5.4(b) hereof, on the following basis: holders of Series C Preferred Stock shall have that number of votes per shares as is equal to the number of shares of Common Stock into which each such share of Series C Preferred Stock held by such holder is then convertible. (b) (i) If the corporation shall fail to pay dividends on the Series C Preferred Stock in accordance with Section 5.5 hereof, then the holders of Series C Preferred Stock shall, upon notice from holders of at least twenty-five percent (25%) of the total outstanding shares of (A) Series C Preferred Stock and (B) all other series of Preferred Stock as to which the corporation shall have failed to pay dividends thereon in accordance with Section 4.5 hereof (or comparable provisions applicable to such series of Preferred Stock), have, in each instance, the right to call a special meeting of stockholders of the Corporation at which the holders of such series (one or more) of Preferred Stock represented in person or by proxy at such meeting shall have the right, voting as a single class, to elect a sufficient number of directors to the Board of Directors of the corporation so that the directors so elected to the Board of Directors (the "Preferred Directors") represent a majority of the Board. The number of the members of the Board of Directors shall accordingly be increased at the meeting and the Preferred Directors shall seek to expeditiously correct or nullify the action giving rise to their election (an "Initiating Action"), at which time they shall (so long as no other Initiating Action shall have occurred and -4A-24 of 26 pages- 28 be continuing) resign or be subject to removal by vote of all of the stockholders of the corporation in accordance with Section 5.4(a) hereof. The contingent rights of the holders of shares of Series C Preferred Stock shall thereupon cease and expire, subject to renewal from time to time upon the same terms and conditions contained herein and the number of the members of the Board of Directors shall be accordingly reduced. (ii) Any director who shall have been elected by holders of one or more series of Preferred Stock or by any director so elected as herein contemplated, may be removed at any time prior to correction or nullification of the Initiating Action, either with or without cause, by, and only by, the affirmative votes of the holders of a majority of the outstanding shares of such series of Preferred Stock given at a special meeting of such stockholders called for the purpose, and any vacancy thereby created may be filled during such period by the holders of such series of Preferred Stock, present in person or represented by proxy at such meeting. Any director to be elected by the Board of Directors of the corporation to replace a director elected by holders of such series of Preferred Stock, or elected by a director as in this sentence provided, and who dies, resigns, or otherwise ceases to be a director shall, except as otherwise provided in the preceding sentence, be elected by the remaining directors theretofore elected by such holders. (c) The holders of Series C Preferred Stock and the holders of Common Stock shall be entitled to vote upon the election of directors on the following basis: so long as at least 100,000 shares of Series C Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations), the holders of Series C Preferred Stock issued and outstanding shall be entitled to elect one director. Section 5.5. Dividend Rights. (a) The holders of the then outstanding shares of Series C Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available therefor, cumulative cash dividends at the annual rate of $0.36 per share, commencing in the first quarter after the first period of three consecutive fiscal quarters in which the corporation's net after-tax income, calculated in accordance with generally accepted accounting principles, exceeds five times the quarterly pro rata portion of the dividend on all then outstanding shares of Series C Preferred Stock and any other series of Preferred Stock entitled to receive dividends other than dividends equal (determined on the basis of the number of shares of Common Stock into which such series of Preferred Stock is then convertible) to any dividend paid on Common Stock. Dividends shall be cumulative and shall accrue, whether or not declared, from and after such calendar quarter. In addition, the holders of outstanding shares of Series C Preferred Stock shall be entitled to receive a dividend equal (determined on the basis of the number of shares of Common Stock into which a share of Series C Preferred Stock then is convertible) to any dividend paid on Common Stock. (b) Notwithstanding any provisions in Section 5.5(a) hereof, dividends which have accrued on the Series C Preferred Stock but have not been paid prior to an automatic conversion pursuant to Section 5.3(b) hereof shall be payable within thirty (30) days of the Closing, as defined in Section 5.3(b), to each record holder of Series C Preferred Stock immediately prior to the automatic conversion. -4A-25 of 26 pages- 29 Section 5.6. Covenants. So long as, at least 100,000 shares of Series C Preferred Stock shall be outstanding (as adjusted for all subdivisions and combinations), the corporation shall not, without first obtaining the affirmative vote or written consent of not less than sixty-six and two-thirds percent (66 2/3%) of such outstanding shares of the Series C Preferred Stock: (a) amend or repeal any provision of, or add any provision to, the corporation's Restated Articles of Organization or By-Laws if such action would alter or change the preferences, rights, privileges or powers of, or the restrictions provided for the benefit of, the Series C Preferred Stock generally; provided, however, that the corporation shall not take any such action which would reduce or change the preferences, rights, privileges or powers of or the restrictions provided for the benefit of the Series C Preferred Stock without first obtaining the affirmative vote or written consent of not less than sixty-six and two-thirds percent (66 2/3%) of the outstanding share of Series C Preferred Stock; (b) reclassify any Common Stock into shares having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of Series C Preferred Stock; (c) pay or declare any dividend or distribution on any shares of Common Stock or apply any of its assets to the redemption, retirement, purchase or other acquisition directly or indirectly, through subsidiaries, if any, or otherwise, of any shares of Common Stock except from officers, directors or employees of or consultants to the corporation upon termination of employment or upon termination of any other relationship with the corporation and except as pursuant to the corporation's rights of first refusal; (d) create any other class or classes of stock or series of Preferred Stock having any preference or priority as to dividends or assets superior to or on a parity with any such preference or priority of the Series C Preferred Stock; or (e) authorize any merger or consolidation of the corporation with or into any other corporation or entity (except into or with a wholly-owned subsidiary corporation with the requisite shareholder approval), or authorize the sale of substantially all of the assets of the corporation. -4A-26 of 26 pages- 30 Continuation Sheet 6A 6A. STOCKHOLDER MEETINGS Meetings of the stockholders may be held anywhere within the United States. 6B. INTERESTED TRANSACTIONS No contract or other transaction of this corporation with any other person, corporation, association, or partnership shall be affected or invalidated by the fact that (i) this corporation is a stockholder or partner in such other corporation, association, or partnership, or (ii) any one or more of the officers or directors of this corporation is an officer, director or partner of such other corporation, association or partnership, or (iii) any officer or director of this corporation, individually or jointly with others, is a party to or is interested in such contract or transaction. Any director of this corporation may be counted in determining the existence of a quorum at any meeting of the board of directors for the purpose of authorizing or ratifying any such contract or transaction, and may vote thereon, with like force and effect as if he were not so interested or were not an officer, director, or partner of such other corporation, association, or partnership. 6C. AUTHORITY The corporation may be a partner in any business enterprise which it would have power to conduct itself. 6D. AMENDMENT OF RESTATED BY-LAWS The restated by-laws may provide that the directors may make, amend, or repeal the restated by-laws in whole or in part, except with respect to any provision thereof which by law, these articles of organization, or the restated by-laws requires action by the stockholders. 6E. LIMITATION OF DIRECTOR LIABILITY A director shall not be liable to the corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent that the elimination or limitation of liability is not permitted under the Massachusetts Business Corporation Law as in effect when such liability is determined. No amendment or repeal of this provision shall deprive a director of the benefits hereof with respect to any act or omission occurring prior to such amendment or repeal. 6F. INDEMNIFICATION 1. Actions, Suits and Proceedings. The corporation shall indemnify each 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, or has agreed to become, a director or officer of the corporation, or is or was serving, or has agreed to serve, at the request of the corporation, as a director or officer of, or in a similar capacity with, another organization or in any capacity with respect to any employee benefit plan of the corporation (all such persons being referred to hereafter as an 31 "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments and fines incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom, unless the Indemnitee shall be finally adjudicated in such action, suit or proceeding not to have acted in good faith in the reasonable belief that his action was in the best interests of the corporation or, to the extent such matter relates to service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. Notwithstanding anything to the contrary in this Article, except as set forth in Section 5 below, the corporation shall not indemnify an Indemnitee seeking indemnification in connection with a proceeding (or part thereof) initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors of the corporation. 2. Settlements. The right to indemnification conferred in this Article shall include the right to be paid by the corporation for amounts paid in settlement of any such action, suit or proceeding and any appeal therefrom, and all expenses (including attorneys' fees) incurred in connection with such settlement, pursuant to a consent decree or otherwise, unless and to the extent it is determined pursuant to Section 5 below that the Indemnitee did not act in good faith in the reasonable belief that his action was in the best interests of the corporation or, to the extent such matter relates to the service with respect to an employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. 3. Notification and Defense of Claim. As a condition precedent to his right to be indemnified, the Indemnitee must notify the corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving him for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the corporation is so notified, the corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee. After notice from the corporation to the Indemnitee of its election so to assume such defense, the corporation shall not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with such claim, other than as provided below in this Section 3. The Indemnitee shall have the right to employ his own counsel, in connection with such claim, but the fees and expenses of such counsel incurred after notice from the corporation of its assumption of the defense thereof shall be at the expense of the Indemnitee unless (i) the employment of counsel by the Indemnitee has been authorized by the corporation, (ii) counsel to the Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the corporation and the Indemnitee in the conduct of the defense of such action or (iii) the corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel for the Indemnitee shall be at the expense of the corporation, except as otherwise expressly provided by this Article. The corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the corporation or as to which counsel for the Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. 4. Advance of Expenses. Subject to the provisions of Section 5 below, in the event the corporation does not assume the defense pursuant to Section 3 of this Article of any action, suit, proceeding or investigation of which the corporation receives notice under this Article, any - 6A-2 of 6 pages - 32 expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom shall be paid by the corporation in advance of the final disposition of such matters, provided, however, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the corporation as authorized in this Article. Such undertaking may be accepted without reference to the financial ability of the Indemnitee to make such repayment. 5. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Section 1, 2 or 3 of this Article, the Indemnitee shall submit to the corporation a written request, including in such request such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification or advancement of expenses. Any such indemnification or advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the corporation of the written request of the Indemnitee, unless the corporation determines, by clear and convincing evidence, within such 60-day period that the Indemnitee did not meet the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made in each instance by (a) a majority vote of a quorum of the directors of the corporation, (b) a majority vote of a quorum of the outstanding shares of stock of all classes entitled to vote for directors, voting as a single class, which quorum shall consist of stockholders who are not at that time parties to the action, suit or proceeding in question, (c) independent legal counsel (who may be regular legal counsel to the corporation), or (d) a court of competent jurisdiction. 6. Remedies. The right to indemnification or advances as granted by this Article shall be enforceable by the Indemnitee in any court of competent jurisdiction if the corporation denies such request, in whole or in part, or if no disposition thereof is made within the 60-day period referred to above in Section 5. Unless otherwise provided by law, the burden of proving that the Indemnitee is not entitled to indemnification or advancement of expenses under this Article shall be on the corporation. Neither the failure of the corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, nor an actual determination by the corporation pursuant to Section 5 that the Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. The Indemnitee's expenses (including attorneys' fees) incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the corporation. 7. Subsequent Amendment. No amendment, termination or repeal of this Article or of the relevant provisions of Chapter 156B of the Massachusetts General Laws or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions thereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal. - 6A-3 of 6 pages - 33 8. Other Rights. The indemnification and advancement of expenses provided by this Article shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or directors or otherwise, both as to action in his official capacity and as to action in any other capacity while holding office for the corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of the Indemnitee. Nothing contained in this Article shall be deemed to prohibit, and the corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article. In addition, the corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the corporation or other persons serving the corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article. 9. Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by the corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the corporation shall nevertheless indemnify the Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which the Indemnitee is entitled. 10. Insurance. The corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another organization or employee benefit plan against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under Chapter 156B of the Massachusetts General Laws. 11. Merger or Consolidation. If the corporation is merged into or consolidated with another corporation and the corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the corporation under this Article with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation. 12. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law. 13. Subsequent Legislation. If the Massachusetts General Laws are amended after adoption of this Article to expand further the indemnification permitted to Indemnitees, then the corporation shall indemnify such persons to the fullest extent permitted by the Massachusetts General Laws, as so amended. - 6A-4 of 6 pages - 34 6G. CLASSIFIED BOARD OF DIRECTORS This Article is inserted for the management of the business and for the conduct of the affairs of the corporation. 1. Number of Directors. Subject to the rights of the holders of Undesignated Preferred Stock of the corporation then outstanding to elect additional directors under specified circumstances, the number of directors of the corporation shall not be less than three. The exact number of directors within the limitation specified in the preceding sentence shall be fixed from time to time pursuant to a resolution adopted by the Board of Directors. 2. Classes of Directors. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the designated number of directors by three, then, if such fraction is one-third, the extra director shall be a member of Class III, and if such fraction is two-thirds, one of the extra directors shall be a member of Class III and one of the extra directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the Board of Directors. 3. Election of Directors. Elections of directors need not be by written ballot except as and to the extent provided in the Restated By-laws of the corporation. 4. Terms of Office. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that each initial director in Class I shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's 1992 fiscal year; each initial director in Class II shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's 1993 fiscal year; and each initial director in Class III shall serve for a term ending on the date of the annual meeting next following the end of the Corporation's 1994 fiscal year; and provided further, that the term of each director shall be subject to the election and qualification of his successor and to his earlier death, resignation or removal. 5. Allocation of Directors Among Classes in the Event of Increases or Decreases in the Number of Directors. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he is a member and (ii) the newly created or eliminated directorships resulting form such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors. 6. Quorum; Action at Meeting. A majority of the directors at any time in office shall constitute a quorum for the transaction of business. In the event one or more of the directors shall be disqualified to vote at any meeting, then the required quorum shall be reduced by one for - 6A-5 of 6 pages - 35 each such director so disqualified, provided that in no case shall less than one-third of the number of directors fixed pursuant to Section 1 above constitute quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of those present may adjourn the meeting from time to time. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law, by the By-laws of the Corporation or by this Certificate of Incorporation. 7. Removal. Subject to the rights of the holders of any Preferred Stock then outstanding, directors or the entire Board of Directors may be removed only with cause, by the holders of two-thirds of the shares then entitled to vote at an election of directors. 8. Vacancies. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by a vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for which such director shall have chosen, subject to the election and qualification of his/her successor and to his/her earlier death, resignation or removal. 6H. AMENDMENTS TO ARTICLES OF ORGANIZATION Notwithstanding any other provisions of law, these Articles of Organization or the Restated By-laws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least two-thirds (66-2/3%) of the votes which all stockholders would be entitled to cast at an annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with Sections 6E, 6F and Paragraph 7 of Section 6G of these Restated Articles of Organization. - 6A-6 of 6 pages - 36 *We further certify that the foregoing restated articles of organization effect no amendments to the articles of organization of the corporation as heretofore amended, except amendments to the following articles 3, 4 and 6 (*If there are no such amendments, state "None"). Briefly describe amendments in space below: See Attachment B IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names this 22nd day of January in the year 1992. /s/Steven J. Lee President - ----------------------------------------------------------- /s/Eric G. Walters Clerk - ----------------------------------------------------------- 37 Attachment B Article 3 was amended to increase authorized capital stock, both common and preferred. Article 4 was amended and restated in its entirety to modify the preferences, voting powers and special or relative rights and privileges of the Company's Common Stock, including the following: (1) insert a new Section 2 providing for 2,000,000 shares of undesignated preferred stock; (2) amending Section 3 (previously Section 2) to provide for designated preferred stock of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, including reducing the number of shares designated as Series C Preferred Stock from 520,000 to 502,183 shares; (3) deleting Section 3.4 providing for redemption rights for the Series A Preferred Stock and Series B Preferred Stock; (4) amending Sections 4.4 and 5.4 to provide that preferred stock which has been converted may not be reissued; and (5) other conforming changes with respect to the rights and preferences of the Company's capital stock. Article 6 was amended to add new Section 6F providing for indemnification, new Section 6G providing for the classification of the Board of Directors and a new Section 6H requiring two-thirds vote for certain corporate actions. 38 THE COMMONWEALTH OF MASSACHUSETTS RESTATED ARTICLES OF ORGANIZATION (GENERAL LAWS, CHAPTER 156B, SECTION 74) I hereby approve the within restated articles of organization and, the filing fee in the amount of $20,132.19 having been paid, said articles are deemed to have been filed with me this 22nd day of January, 1992. /s/Michael Joseph Connolly MICHAEL JOSEPH CONNOLLY SECRETARY OF STATE TO BE FILLED IN BY CORPORATION PHOTO COPY OF RESTATED ARTICLES OF ORGANIZATION TO BE SENT TO: Ellen V. Chiniara, Esq. Hale and Dorr 60 State Street Boston, Massachusetts 02109 Telephone: (617) 742-9100 COPY MAILED 39 THE COMMONWEALTH OF MASSACHUSETTS OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE MICHAEL JOSEPH CONNOLLY, SECRETARY ONE ASHBURTON PLACE, BOSTON, MASS. 02108 FEDERAL IDENTIFICATION NO. 04-3033368 CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING A SERIES OF A CLASS OF STOCK GENERAL LAWS, CHAPTER 156B, SECTION 26 We, Steven J. Lee , President and Eric Walters , Clerk of PolyMedica Industries, Inc. (Name of Corporation) located at 2 Constitution Way, Woburn, MA 01801 do hereby certify that at a meeting of the directors of the corporation held on March 13, 1992, the following vote establishing and designating a series of a class of stock and determining the relative rights and preferences thereof was duly adopted: VOTED: That pursuant to the authority granted to and vested in the Board of Directors of this Corporation (hereinafter called the "Board of Directors" or the "Board") in accordance with the provisions of the Articles of Organization, there hereby shall be established from the shares of Preferred Stock, a series of preferred stock of the Corporation, which shall consist of 100,000 shares and shall be designed "Series A Junior Participating Preferred Stock" having the relative rights, preferences and limitations set forth as follows, and that the President, any Vice President, Treasurer and Clerk of the Corporation be, and each of them acting singly hereby is, authorized to execute and file with the Secretary of State of the Commonwealth of Massachusetts a Certificate of Vote of Directors Establishing a Series of a Class of Stock, and to execute such other documents and take such other actions as they or any of them shall deem necessary to effectuate the designation of the Series A Junior Participating Preferred Stock. 40 PREFERENCES, VOTING POWERS, QUALIFICATIONS, SPECIAL OR RELATIVE RIGHTS OR PRIVILEGES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Junior Participating Preferred Stock") and the number of shares constituting the Series A Junior Participating Preferred Stock shall be 100,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Junior Participating Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Junior Participating Preferred Stock. Section 2. Dividends and Distributions. (A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock, in preference to the holders of Common Stock, par value $.01 per share (the "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Corporation legally available for the payment of dividends, quarterly dividends payable in cash on March 31, June 30, September 30 and December 31 in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, than in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. - 2 - 41 (B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and the Corporation shall pay such dividend or distribution on the Series A Junior Participating Preferred Stock before the dividend or distribution declared on the Common Stock is paid or set apart; provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $1 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. - 3 - 42 (B) Except as otherwise provided herein, in the Articles of Organization or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the holders of the Series A Junior Participating Preferred Stock, voting as a separate series from all other series of Preferred Stock and classes of capital stock, shall be entitled to elect two members of the Board of Directors in addition to any Directors elected by any other series, class or classes of securities and the authorized number of Directors will automatically be increased by two. Promptly thereafter, the Board of Directors of the Corporation shall, as soon as may be practicable, call a special meeting of holders of Series A Junior Participating Preferred Stock for the purpose of electing such members of the Board of Directors. Said special meeting shall in any event be held within 45 days of the occurrence of such arrearage. (ii) During any period when the holders of Series A Junior Participating Preferred Stock, voting as a separate series, shall be entitled and shall have exercised their right to elect two Directors, then and during such time as such right continues (a) the then authorized number of Directors shall be increased by two, and the holders of Series A Junior Participating Preferred Stock, voting as a separate series, shall be entitled to elect the additional Director so provided for, and (b) each such additional Director shall not be a member of any existing class of the Board of Directors, but shall serve until the next annual meeting of stockholders for the election of Directors, or until his successor shall be elected and shall qualify or until his right to hold such office terminates pursuant to the provisions of this Section 3(C). (iii) A Director elected pursuant to the terms hereof may be removed with or without cause by the holders of Series A Junior Participating Preferred Stock entitled to vote in an election of such Director. (iv) If, during any interval between annual meetings of stockholders for the election of Directors and while the holders of Series A Junior Participating Preferred Stock shall be entitled to elect two Directors, there is no such Director in office by reason of resignation, death or removal, then, promptly thereafter, the Board of Directors shall cause a special meeting of the holders of Series A Junior Participating Preferred Stock for the purpose of filling such vacancy and such vacancy shall be filled at such special meeting. Such special meeting shall in any event be held within 45 days of the occurrence of such vacancy. (v) At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on any shares of Series A Junior Participating Preferred Stock outstanding are paid, and, in addition thereto, at least one regular dividend has been paid subsequent to curing such arrearage, the term of office of any Director elected pursuant to this Section 3(C), or his successor, shall automatically terminate, and the authorized number of Directors shall automatically decrease by two, the rights of the holders of the shares of the Series A Junior Participating Preferred Stock to vote as provided in this Section 3(C) shall cease, subject to renewal from time to time upon the same terms and conditions, and the holders of shares of the - 4 - 43 Series A Junior Participating Preferred Stock shall have only the limited voting rights elsewhere herein set forth. (D) Except as set forth herein, or as otherwise provided by law, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; or (iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. - 5 - 44 Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled 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 subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law. Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except distributions made ratably on the Series A Junior Participating Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. (B) Neither the consolidation, merger or other business combination of the Corporation with or into any other corporation nor the sale, lease, exchange or conveyance of all or any part of the property, assets or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 6. (C) In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. Notwithstanding anything to the contrary contained herein, in case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, -6- 45 equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable. Section 9. Rank. The Series A Junior Participating Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Preferred Stock issued either before or after the issuance of the Series A Junior Participating Preferred Stock, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Articles of Organization of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Junior Participating Preferred Stock, voting together as a single class. Section 11. Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which are integral multiples of one one-hundredth of a share of Series A Junior Participating Preferred Stock which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock. IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto signed our names the Thirteenth day of March in the year 1992 /s/Steven J. Lee , President - -------------------------------------------------------------------------------- Steven J. Lee /s/Eric Walters , Clerk - -------------------------------------------------------------------------------- Eric Walters -7- 46 THE COMMONWEALTH OF MASSACHUSETTS CERTIFICATE OF VOTE OF DIRECTORS ESTABLISHING A SERIES OF A CLASS OF STOCK (General Laws, Chapter 156B, Section 26) I hereby approve the within certificate and, the filing fee in the amount of $100.00 having been paid, said certificate is hereby filed this 13th day of March, 1992. MICHAEL JOSEPH CONNOLLY SECRETARY OF STATE TO BE FILLED IN BY CORPORATION PHOTO COPY OF CERTIFICATE TO BE SENT TO: Elizabeth H. Tauro ---------------------------------------------------------- Hale and Dorr ---------------------------------------------------------- 60 State Street ---------------------------------------------------------- Boston, MA 02109 ---------------------------------------------------------- Telephone 617-742-9100 ------------------------------------------------ -8- 47 FEDERAL IDENTIFICATION NO. 04-3033368 ---------------------- The Commonwealth of Massachusetts William Francis Galvin Secretary of the Commonwealth One Ashburton Place, Boston, Massachusetts 02108-1512 ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) We, Arthur A. Siciliano and Eric G. Walters, President and Clerk of PolyMedica Industries, Inc. - -------------------------------------------------------------------------------- (EXACT Name of Corporation) located at: 11 State Street, Woburn, Massachusetts 01801 - -------------------------------------------------------------------------------- (MASSACHUSETTS Address of Corporation) do hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 1 - -------------------------------------------------------------------------------- (Number those articles 1, 2, 3, 4, 5 and/or 6 being amended hereby) of the Articles of Organization were duly adopted at a meeting held on September 11, 1997, by vote of: 7,519,401 shares of Common Stock out of 8,492,739 shares outstanding, - ------------- ------------ --------- type, class & series (if any) shares of out of shares outstanding, and - ------------- ------------ --------- type, class & series (if any) shares of out of shares outstanding, and - ------------- ------------ --------- type, class & series (if any) CROSS OUT being at least a majority of each type, class or series INAPPLI- outstanding and entitled to vote thereon: CABLE CLAUSE 48 To CHANGE the number of shares and the par value (if any) of any type, class or series of stock which the corporation is authorized to issue, fill in the following: The total presently authorized is: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - ---- ---------------- ---- ---------------- --------- COMMON: COMMON: PREFERRED: PREFERRED: CHANGE the total authorized to: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - ---- ---------------- ---- ---------------- --------- COMMON: COMMON: PREFERRED: PREFERRED: Amendment to Article 1: - ---------------------- Article 1 to the Restated Articles of Organization filed on January 22, 1997 is hereby amended by deleting the name "PolyMedica Industries, Inc." set forth therein and inserting in its place as the name of the corporation "PolyMedica Corporation", such that Article 1 shall now read as follows: 1. The name by which the corporation shall be known is: PolyMedica Corporation The foregoing amendment will become effective when these articles of amendment are filed in accordance with Chapter 156B, Section 6 of the General Laws unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such a later date. LATER EFFECTIVE DATE: - ----------------------- IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed our names this nineteenth day of September, in the year 1997. /s/Arthur A. Siciliano President - ---------------------------------------------------------------------- /s/Eric G. Walters Clerk - ---------------------------------------------------------------------- -2- 49 The Commonwealth of Massachusetts ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and, the filing fee in the amount of $100 having been paid, said articles are deemed to have been filed with me this 19th day of September 1997. /s/William Francis Galvin WILLIAM FRANCIS GALVIN Secretary of the Commonwealth TO BE FILED IN BY CORPORATION Photocopy of Articles of Amendment to be sent to: TO: Mr. Eric G. Walters PolyMedica Corporation 11 State Street, Woburn, MA 01801 Telephone: (617) 933-2020 -3- 50 FEDERAL IDENTIFICATION NO. 04-3033368 ---------------------- The Commonwealth of Massachusetts William Francis Galvin Secretary of the Commonwealth One Ashburton Place, Boston, Massachusetts 02108-1512 ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) We: Arthur A. Siciliano , President --------------------------------------------------------------- and Eric G. Walters , Clerk --------------------------------------------------------------- of PolyMedica Corporation , --------------------------------------------------------------- located at 11 State Street, Woburn, MA 01801 , -------------------------------------------------------- (Street address of corporation in Massachusetts) certify that these Articles of Amendment affecting articles numbered: 3 - -------------------------------------------------------------------------------- (Number those articles 1, 2, 3, 4, 5 and/or 6 being amended) of the Articles of Organization were duly adopted at a meeting held on November 28, 2000 by vote of: 10,063,746 shares of Common Stock of 13,271,966 shares outstanding, - --------------- ------------ ------------- type, class & series (if any) shares of of shares outstanding, and - --------------- ------------ ------------- type, class & series (if any) shares of of shares outstanding, and - --------------- ------------ ------------- type, class & series (if any) * being at least two-thirds of each type, class or series outstanding and entitled to vote thereon and of each type class or series of stock whose rights are adversely affected thereby: To CHANGE the number of shares and the par value (if any) of any type, class or series of stock which the corporation is authorized to issue, fill in the following: 51 The total presently authorized is: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - ---- ---------------- ---- ---------------- --------- COMMON: COMMON: 20,000,000 $.01 PREFERRED: PREFERRED: 3,112,164 $.01 CHANGE the total authorized to: WITHOUT PAR VALUE STOCKS WITH PAR VALUE STOCKS TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE - ---- ---------------- ---- ---------------- --------- COMMON: COMMON: 50,000,000 $.01 PREFERRED: PREFERRED: 3,112,164 $.01 The foregoing amendment(s) will become effective when these Articles of Amendment are filed in accordance with General Laws, Chapter 156B. Section 6 unless these articles specify, in accordance with the vote adopting the amendment, a later effective date not more than thirty days after such filing, in which event the amendment will become effective on such later date. Later effective date: ------------------------------- SIGNED UNDER THE PENALTIES OF PERJURY, this 29th day of November, 2000. /s/ Arthur A. Siciliano President - ---------------------------------------------------------------------- /s/ Eric G. Walters Clerk - ---------------------------------------------------------------------- -2- 52 The Commonwealth of Massachusetts ARTICLES OF AMENDMENT (General Laws, Chapter 156B, Section 72) I hereby approve the within articles of amendment and, the filing fee in the amount of $30,000 having been paid, said articles are deemed to have been filed with me this 11th day of December 2000. Effective date: -------------------------- /s/ William Francis Galvin WILLIAM FRANCIS GALVIN Secretary of the Commonwealth TO BE FILED IN BY CORPORATION Photocopy of document to be sent to: TO: Jennifer B. Black, Esq. Hale and Dorr LLP 60 State Street Boston, MA 02109 Telephone: (617) 526-6000 -3- EX-2 3 b40001pcex2.txt RESTATED BY-LAWS 1 Exhibit 2 RESTATED BY-LAWS OF POLYMEDICA INDUSTRIES, INC. (AS AMENDED THROUGH APRIL 11, 1995) 2 TABLE OF CONTENTS ARTICLE I Meetings of Stockholders 1 Section 1. Place 1 Section 2. Annual Meeting 1 Section 3. Special Meetings 1 Section 4. Notice 1 Section 5. Quorum 2 Section 6. Adjournment 2 Section 7. Voting 2 Section 8. Action by Consent 3 Section 9. Introduction of Business at Meeting 3 Section 10. Action at Meeting 5 Section 11. Appointment of Judges of Election 5 ARTICLE II Officers and Directors 6 Section 1. Enumeration and Election of Directors 6 Section 2. Enumeration and Election of Officers 7 Section 3. Qualifications of Directors and Officers 7 Section 4. Removal of Directors and Officers 7 Section 5. Resignation of Directors and Officers 8 Section 6. Vacancies 8 Section 7. Compensation of Directors and Officers 8 ARTICLE III Meeting of Directors 8 Section 1. Regular Meetings 8 Section 2. Special Meetings 9 Section 3. Notice 9 Section 4. Quorum 9 Section 5. Action by Consent 9 ARTICLE IV Powers and Duties of Directors and Officers 10 Section 1. Directors 10 Section 2. Chairman and President 10 Section 3. Vice Presidents 10 Section 4. Treasurer 11 Section 5. Clerk 11 Section 6. Other Officers 11 ARTICLE V Employment Contracts 11 ARTICLE VI Stock and Transfer Books 11 ARTICLE VII Issue of Authorized Stock 13 ARTICLE VIII Signature of Checks 13 ARTICLE IX Seal and Fiscal Year 13 ARTICLE X Amendment of By-Laws 13 ARTICLE XI Control Share Acquisitions 14
3 RESTATED BY-LAWS OF POLYMEDICA INDUSTRIES, INC. ARTICLE I Meetings of Stockholders Section 1. Place. Meetings of the stockholders shall be held at the principal office of the corporation in Massachusetts or at such other place as may be named in the notice. Section 2. Annual Meetings. The annual meeting of the stockholders shall be held within six months after the end of the fiscal year of the corporation on such date and at such hour and place as the Board of Directors or an officer designated by the Board of Directors shall determine. In the event that no date for the annual meeting is established or such meeting has not been held on the date so determined, a special meeting in lieu of the annual meeting may be held with all of the force and effect of an annual meeting. Section 3. Special Meetings. A special meeting of the stockholders may be called at any time by the Chairman of the Board, the President, the Chief Executive Officer or a majority of the Board of Directors. Each call of the meeting shall state the place, date, hour and purposes of the meeting. Section 4. Notice. A written notice of the date, place and hour of all meetings of stockholders stating the purposes of the meeting shall be given by the Clerk or an Assistant Clerk (or by any other officer who is entitled to call such a meeting) at least ten (10) days before the meeting to each stockholder entitled to vote thereat and to each stockholder who by law, by the Restated Articles of Organization or these Restated By-Laws is entitled to such notice, by leaving such notice with him or at his residence or usual place of business, or by mailing it, postage prepaid, and addressed to such stockholder at his address as it appears in the records of the corporation. Whenever 4 notice of a meeting is required to be given a stockholder under applicable law, the Restated Articles of Organization or these Restated By-laws, a written waiver thereof, executed before or after the meeting by such stockholder or his attorney thereunto authorized and filed with the records of the meeting, shall be deemed equivalent to such notice. Section 5. Quorum. A majority in interest of all stock issued, outstanding and entitled to vote at a meeting shall constitute a quorum with respect to that matter, except that if two or more classes of stock are outstanding and entitled to vote as separate classes, then in the case of each such class, a quorum shall consist of the holders of the number of shares of the stock of the class issued, outstanding and entitled to vote. Section 6. Adjournment. Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these Restated By-laws by the stockholders present or represented at the meeting, although less than a quorum, or by any officer entitled to preside or to act as clerk of such meeting, if no stockholder is present. It shall not be necessary to notify any stockholder of any adjournment. Any business which could have been transacted at any meeting of the stockholders as originally called may be transacted at any adjournment of the meeting. Section 7. Voting. Stockholders entitled to vote shall have one vote for each share of stock owned by them and a proportionate vote for each fractional share; provided that the corporation shall not directly or indirectly vote any share of its own stock, and provided further that stock shall not be voted if any installment of the subscription therefor has been duly demanded and is overdue and unpaid. Stockholders may vote in person or by written proxy dated not more than six months before the meeting named in the proxy. Proxies shall be filed with the clerk of the meeting, or of any adjourned meeting, before being voted. 5 Section 8. Action by Consent. Any action required or permitted to be taken at any meeting of the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of stockholders, Such consents shall be treated for all purposes as a vote at a meeting. Section 9. Introduction of Business at Meeting. Except as otherwise provided by law, at any annual or special meeting of stockholders only such business shall be conducted as shall have been properly brought before the meeting. In order to be properly brought before the meeting, such business must have been either (A) specified in the written notice of the meeting (or any supplement thereto) given to stockholders of record on the record date for such meeting by or at the direction of the Board of Directors, (B) brought before the meeting at the direction of the Board of Directors or the chairman of the meeting, or (C) specified in a written notice given by or on behalf of a stockholder of record on the record date for such meeting entitled to vote thereat or a duly authorized proxy for such stockholder, in accordance with all of the following requirements. A notice referred to in clause (C) hereof must be delivered personally to or mailed to and received at the principal executive office of the corporation, addressed to the attention of the Clerk, not more than five (5) days after the date of the initial notice referred to in clause (A) hereof, in the case of business to be brought before a special meeting of stockholders, and not less than thirty (30) days prior to the first anniversary date of the initial notice referred to in clause (A) hereof to the previous year's annual meeting, in the case of business to be brought before an annual meeting of stockholders, provided, however, that such notice shall not be required to be given more than sixty (60) days to an annual meeting of stockholders. Such notice referred to in clause (C) hereof shall set forth (i) a full description of each such item of business proposed to be brought before the meeting, (ii) the name and address of the person proposing to bring such business before the meeting, (iii) the class and number of shares held of record, 6 held beneficially and represented by proxy by such person as of the record date for the meeting (if such date has then been made publicly available) and as of the date of such notice, (iv) if any item of such business involves a nomination for director, all information regarding each such nominee that would be required to be set forth in a definitive proxy statement filed with the Securities and Exchange Commission pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto, and the written consent of each such nominee to served if elected, and (v) all other information that would be required to be filed with the Securities and Exchange Commission if, with respect to the business proposed to be brought before the meeting, the person proposing such business was a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934, as amended, or any successor thereto. No business shall be brought before any meeting of stockholders of the corporation otherwise than as provided in this paragraph. Notwithstanding the foregoing provisions, the Board of Directors shall not be obligated to include information as to any nominee for director in any proxy statement or other communication sent to stockholders. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that any proposed item of business was not brought before the meeting in accordance with the foregoing procedure and, if he should so determine, he shall so declare to the meeting and the defective item of business shall be disregarded. Section 10. Action at Meeting. When a quorum is present at any meeting, the holders of a majority of the stock present or represented and voting on a matter (or if there are two or more classes of stock entitled to vote as separate classes, then in the case of each such class, the holders of a majority of the stock of that class present or represented and voting on a matter), shall decide any matter to be voted on by the stockholders, except when a larger vote is required by law, the Restated Articles of Organization or these Restated By-laws. Any election by stockholders entitled to vote at 7 the election. No ballot shall be required for such election unless requested by a stockholder present or represented at the meeting and entitled to vote in the election. Section 11. Appointment of Judges of Election. In advance of any meeting of stockholders, the Board of Directors may appoint judges of election, who need not be stockholders, to act at such meeting or any adjournment thereof. If judges of election be not so appointed, the chairman of any such meeting may and, on the request of any stockholder or his proxy shall, make such appointment at the meeting. The number of judges shall be one or three as shall be determined by the Board of Directors, except that, if appointed at the meeting on the request of one or more stockholders or proxies, the holders of a majority of the shares of the corporation present and entitled to vote shall determine whether one or three judges are to be appointed. No person who is a candidate for office shall act as a judge. ARTICLE II Officers and Directors Section 1. Enumeration and Election of Directors. The corporation shall have a Board of Directors of not less than three directors, except that whenever there shall be fewer than three stockholders, the number of directors may be less than three but in no event less than the number of stockholders. The number of directors may be decreased at any time and from time to time either by the stockholders or by a majority of the directors then in office, but only to eliminate vacancies existing by reason of the death, resignation, removal or expiration of the term of one or more directors. The directors of the corporation shall be divided into three classes, labelled Class I Directors, Class II Directors and Class III Directors, each class to consist of approximately an equal number of directors who shall serve for staggered three-year terms. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the designated number of directors by three, then, if such fraction is one-third, the extra director shall be a member 8 of Class III, and if such a fraction is two-thirds, one of the extra directors shall be a member of Class III and one of the extra directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the Board of Directors. At each annual meeting of the stockholders, the successors to the directors of the class whose term shall expire in that year shall be elected to hold office for a term of three years from the date of their election for until their successors shall be duly elected and qualified, provided, however, the initial directors to be elected as Class I Directors, Class II Directors and Class III Directors shall be elected for one year, two years and three years, respectively. In the case of any decrease or increase in the number of directors, the increase or decrease shall be distributed among the several classes as equally as possible, as shall be determined by the affirmative vote of the whole Board of Directors may be enlarged at any time and from time to time by the stockholders or by vote of majority of the directors then in office. Each Director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualified, or until his earlier death, resignation or removal for cause. Section 2. Enumeration and Election of Officers. The officers of the corporation shall be a President, a Treasurer, a Clerk and such other officers as the directors may from time to time appoint. The directors at their annual meeting in each year shall elect a President, a Treasurer and a Clerk, and may at any time elect such other officers as they shall determine. Except as hereinafter provided, the President, the Treasurer and the Clerk shall hold office until the next annual meeting of stockholders and until their respective successors are elected and qualified. Other officers shall serve at the pleasure of the directors. Section 3. Qualifications of Directors and Officers. Directors and officers need not be stockholders. No officer need be a director. Two or more offices may be held by the same person. The Clerk shall be a resident of Massachusetts unless a resident agent shall have been appointed pursuant to the Massachusetts Business Corporation Law. 9 Section 4. Removal of Directors and Officers. Directors may be removed from office at any time but only for cause and only by the vote of the holders of two-thirds (66 2/3%) of the shares entitled to vote in the election of directors. Officers elected or appointed by the directors may be removed from their respective offices with or without cause by vote of a majority of the directors then in office. A director or officer may be removed for cause only after a reasonable notice and opportunity to be heard before the body proposing to remove him. Section 5. Resignation of Directors and Officers. Resignations by officers or directors shall be given in writing to the President, Treasurer, Clerk or directors. Section 6. Vacancies. Unless and until filled by the stockholders, any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, may be filled by vote of a majority of the directors present at any meeting of directors at which a quorum is present. Each such successor shall hold office for the unexpired term of his predecessor and until his successor is chosen and qualified or until his earlier death, resignation or removal. Vacancies in any other office may be filled by the directors. Section 7. Compensation of Directors and Officers. Directors may be paid such compensation for their services and such reimbursement for expenses of attendance at meetings as the Board of Directors may from time to time determine. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Officers of the corporation shall be entitled to such salaries, compensation or reimbursement as shall be fixed or allowed from time to time by the Board of Directors. 10 ARTICLE III Meeting of the Directors Section 1. Regular Meetings. Regular meetings of the directors may be held at such times and places within or without the Commonwealth of Massachusetts as the directors may fix. An annual meeting of the directors shall be held in each year immediately after and at the place of the meeting at which the Board is elected. Section 2. Special Meetings. Special meetings of the directors may be held at such times and places within or without the Commonwealth of Massachusetts as may be determined by the directors or by the President. Special meetings of the directors may be called by the President, the Chairman, the Treasurer, or by two or more directors, provided reasonable notice thereof is given to each director by the Clerk or Assistant Clerk, or by the officer or one of the directors calling the meeting. Section 3. Notice. No notice need be given for a regular or annual meeting of the directors. Forty-eight hours' notice by mail, telegraph, telephone or word of mouth shall be given for a special meeting unless shorter notice is adequate under the circumstances. A notice or waiver of notice need not specify the purpose of any special meeting. Notice of a meeting need not be given to any director, if a written waiver of notice, executed by him before or after the meeting, is filed with the records of the meeting, or to any director who attends the meeting without protesting prior thereto or at its commencement the lack of notice to him. Section 4. Quorum. A majority of the directors then in office shall constitute a quorum, but a smaller number may adjourn finally or from time to time without further notice until a quorum is secured. If a quorum is present, a majority of the directors present may take any action on behalf of the Board except to the extent that a larger number is required by law or the Restated Articles of Organization or the Restated By-Laws. 11 Section 5. Action by Consent. Any action required or permitted to be taken at any meeting of the directors may be taken without a meeting if all the directors consent to the action in writing and the written consents are filed with the records of the meetings of directors. Such consents shall be treated for all purposes as a vote at a meeting. ARTICLE IV Powers and Duties of Directors and Officers Section 1. Directors. The business of the corporation shall be managed by the directors, who may exercise all such powers of the corporation as are not by law, by the Restated Articles of Organization or by the Restated By-Laws required to be otherwise exercised. The directors may from time to time to the extent permitted by law delegate any of their powers to committees, officers, attorneys, or agents of the corporation, subject to such limitations as the directors may impose. Section 2. Chairman and President. The directors may appoint a Chairman of the Board who, unless otherwise determined by the directors, shall, when present, preside at all meetings of the directors and shall have such other powers and duties as customarily belong to the office of Chairman of the Board or as may be designated from time to time by the directors. The President shall be the Chief Executive Officer of the corporation unless the directors designate another officer, in which event he shall, unless the directors otherwise determine, be the Chief Operating Officer. The Chief Executive Officer shall, subject to the direction of the directors, have general supervision and control of the business of the corporation. Except as provided above regarding the Chairman and unless the directors specify otherwise, the Chief Executive Officer shall preside at all meetings of stockholders and of the directors at which he is present. The President and Chief Executive Officer shall perform such other duties and shall have such other powers as the directors may designate from time to time. Section 3. Vice Presidents. The Vice Presidents, if any, shall have such powers and duties as may be designated from time to time by the directors or by the President. 12 Section 4. Treasurer. Except as the directors shall otherwise determine, the Treasurer shall be the Chief Financial and Accounting Officer of the corporation and shall have such other powers and duties as customarily belong to the office of Treasurer or as may be designated from time to time by the directors or by the President. Section 5. Clerk. The clerk shall record all proceedings of the stockholders and directors in a book or books to be kept therefor and shall have custody of the seal of the corporation. Section 6. Other Officers. Other officers shall have such powers as may be designated from time to time by the directors. ARTICLE V Employment Contracts The corporation may enter into employment contracts authorized by the directors extending beyond the terms of the directors. An employment contract shall be valid despite any inconsistent provision of these Restated By-laws relating to terms of officers and removal of officers with or without cause but shall not affect the authority of the directors to remove officers. Any removal or failure to reelect an officer shall be without prejudice to the officer's contract rights, if any. ARTICLE VI Stock and Transfer Books The corporation shall keep in the Commonwealth of Massachusetts at its principal office (or at an office of its transfer agent or of its Clerk or of its resident agent) stock and transfer records, which shall contain the names of all stockholders and the record address and the amount of stock held by each. The corporation for all purposes may conclusively presume that the registered holder of a stock certificate is the absolute owner of the shares represented thereby and that his record address is his proper address. The 13 directors may fix in advance a time, which shall not be more than sixty days before the date of any meeting of stockholders or the date for the payment of any dividend or the making of any distribution to stockholders or the last day on which the consent or dissent of stockholders may be effectively expressed for any purpose, as the record date for determining the stockholders having the right to notice of and to vote at such meeting and any adjournment thereof or the right to receive such dividend or distribution or the right to give such consent or dissent, and in such case only stockholders of record on such record date shall have such rights, notwithstanding any transfer of stock on the books of the corporation after the record date; or without fixing such record date the directors may for any of such purposes close the transfer books for all or any part of such period. If no record date is fixed and the transfer books are not closed: (1) The record date for determining stockholders having the right to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given. (2) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the the Board of Directors acts with respect thereto. ARTICLE VII Issue of Authorized Stock Any unissued capital stock from time to time authorized under the Restated Articles of Organization may be issued by vote of the directors. 14 ARTICLE VIII Signature of Checks All checks drawn of bank accounts of the corporation may be signed on its behalf as authorized from time to time by the directors. ARTICLE IX Seal and Fiscal Year The seal shall be circular in form with the name of the corporation around the periphery and words and figures "Incorporated 1988 Massachusetts" within. The fiscal year shall commence on April 1st of each year. ARTICLE X Amendment of Restated By-laws Subject to the terms of the Restated Articles of Organization of the corporation, as amended, these Restated By-laws may be amended, altered or repealed in whole or in part, and new Restated By-laws may be adopted, by vote of the holders of a majority of the shares of each class of the capital stock outstanding and entitled to vote, except with respect to (a) the provisions of these By-laws governing (i) the staggered Board of Directors, (ii) the removal of directors and (iii) the amendment of these Restated By-laws and (b) any provision of these By-laws which by law, the Restated Articles of Organization or these Restated By-laws requires action by the stockholders, which shall require the vote of the holders of two-thirds (66-2/3%) of the shares of each class of the capital stock outstanding and entitled to vote. Subject to the terms of the Restated Articles of Organization of the corporation, as amended, the directors may also make, amend or repeal these Restated By-laws in whole or in part, except with respect to (a) the provisions of these By-laws governing (i) the staggered Board of Directors, (ii) the removal of directors and (iii) the amendment of these Restated By-laws and (b) any 15 provision of these By-laws which by law, the Restated Articles of Organization or these Restated By-laws requires action by the stockholders. Not later than the time of giving notice of the meeting of stockholders next following the making, amending or repealing by the directors of any By-law, notice thereof stating the substance of such change shall be given to all stockholders entitled to vote on amending the Restated By-laws. Subject to the terms of the Restated Articles of Organization of the corporation, as amended, any By-law adopted by the directors may be amended or repealed by the stockholders. ARTICLE XI Control Share Acquisitions Chapter 110D of the Massachusetts General Laws, as it may be amended from time to time, shall not apply to control share acquisitions of the corporation. -----END PRIVACY-ENHANCED MESSAGE-----