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Exhibit 3.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
KOSAN BIOSCIENCES INCORPORATED
SUSAN M. KANAYA and BLAIR W. STEWART certify that:
1. They are the Chief Financial Officer and Secretary, respectively,
of Kosan Biosciences Incorporated, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
2. The date of filing this corporation's original Certificate of
Incorporation with the Secretary of State of Delaware is April 6, 2000.
3. The following amendment of the Certificate of Incorporation has
been duly approved by the board of directors of this corporation.
4. The first paragraph of Article IV of the corporation's Certificate
of Incorporation is hereby amended and restated to read in its entirety as
follows:
"AUTHORIZATION TO ISSUE TWO CLASSES. The total number of shares of all
classes of stock which the Corporation is authorized to issue is 40,348,182,
consisting of 36,000,000 shares of Common Stock, par value of $0.001 per
share (the "Common Stock") and 4,348,182 shares of Preferred Stock, par value
of $0.001, 1,480,000 shares of which are designated "Series A Preferred
Stock" (the "Series A Preferred"), 1,818,182 shares of which are designated
"Series B Preferred Stock" (the "Series B Preferred"), and 1,050,000 shares
of which are designated "Series C Preferred Stock" (the "Series C Preferred",
and together with the Series A Preferred and the Series B Preferred, the
"Preferred Stock"). Effective upon the date of the filing of this
Certificate of Amendment with the Secretary of State of the State of
Delaware, every one (1) share of the Corporation's Common Stock outstanding
immediately prior to such time shall, without any action on the part of the
respective holders thereof, be reclassified and constituted into three (3)
shares of Common Stock."
5. The foregoing amendment of the Certificate of Incorporation has
been duly approved by the board of directors of the corporation in accordance
with the provisions of Section 242 of the Delaware General Corporation Law.
6. The foregoing amendment of the Certificate of Incorporation has
been duly approved by the written consent of the stockholders in accordance
with Sections 228 and 242 of the Delaware
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General Corporation Law. The total number of outstanding shares of Common
Stock of the corporation is 2,295,098, and the total number of outstanding
shares of Preferred Stock of the corporation is 4,073,573. The number of
shares held by stockholders who consented to this amendment in writing
equaled or exceeded the required percentage. The percentage required was
more than 50% of the outstanding capital stock of the corporation, at least
70% of the outstanding Preferred Stock voting as a single class, at least 50%
of the Series A Preferred voting as a separate class, at least 70% of the
Series B Preferred voting as a separate class and at least 50% of the Series
C Preferred voting as a separate class. Pursuant to Section 228 of the
General Corporation Law, prompt written notice of this amendment has been or
will be given to all stockholders who did not consent to this amendment.
IN WITNESS WHEREOF, the corporation has caused this Certificate of
Amendment to the Certificate of Incorporation to be duly executed by its
Chief Financial Officer and Secretary, this 27th day of September, 2000.
By: /s/ Susan M. Kanaya
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Susan M. Kanaya, Chief Financial Officer
ATTEST:
By: /s/ Blair W. Stewart
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Blair W. Stewart, Secretary
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AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
KOSAN BIOSCIENCES INCORPORATED
Daniel V. Santi and Blair W. Stewart certify that:
A. They are the Chief Executive Officer and Secretary, respectively, of
Kosan Biosciences Incorporated, a California corporation (the "Corporation").
B. The Amended and Restated Articles of Incorporation of the Company
are hereby amended and restated in their entirety to read as set forth below:
* * *
I.
The name of this corporation is Kosan Biosciences Incorporated.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
1. AUTHORIZATION TO ISSUE TWO CLASSES. This Corporation is authorized
to issue two classes of shares designated, respectively, Preferred Stock and
Common Stock. The Corporation is authorized to issue 4,348,182 shares of
Preferred Stock, $0.001 par value, 1,480,000 shares of which are designated
"Series A Preferred Stock" (the "Series A Preferred"), 1,818,182 shares of which
are designated "Series B Preferred Stock" (the "Series B Preferred") and
1,050,000 shares of which are designated "Series C Preferred Stock" (the
"Series C Preferred", and together with the Series A Preferred and the Series B
Preferred, the "Preferred Stock"), and 12,000,000 shares of Common Stock, $0.001
par value (the "Common Stock").
2. PREFERRED STOCK. The rights, preferences, privileges and
restrictions granted to and imposed upon the Preferred Stock are as follows:
(a) DIVIDENDS.
(i) PREFERRED STOCK. The holders of the Series A
Preferred shall be entitled to receive, when and as declared by the Board of
Directors, noncumulative dividends at the rate of
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$0.25 per share (as appropriately adjusted for any stock dividend, stock
split, recapitalization, consolidation or the like of the Series A Preferred)
per annum, payable quarterly as the Board of Directors may from time to time
determine out of funds legally available therefor. The holders of the
Series B Preferred shall be entitled to receive, when and as declared by the
Board of Directors, noncumulative dividends at the rate of $0.49 per share
(as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series B Preferred) per
annum, payable quarterly as the Board of Directors may from time to time
determine out of funds legally available therefor. The holders of the
Series C Preferred shall be entitled to receive, when and as declared by the
Board of Directors, noncumulative dividends at the rate of $1.86 per share
(as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series C Preferred) per
annum, payable quarterly as the Board of Directors may from time to time
determine out of funds legally available therefor. No dividend shall be
declared or paid with respect to Common Stock, the Series A Preferred or the
Series B Preferred until the full dividend for the applicable period has been
declared and paid on the Series C Preferred. After the payment of such
preferential amounts to the holders of the Preferred Stock with respect to
any year, any additional dividend which the Board of Directors may declare
with respect to such year shall be declared simultaneously with respect to
the Preferred Stock and the Common Stock, as if the Preferred Stock were
converted to Common Stock. The right to any dividends under this subsection
(i) shall not be cumulative and no right shall accrue to holders of Preferred
Stock by reason of the fact that dividends on said shares are not declared.
If less than full dividends are paid or declared and set apart for payment to
the holders of the Series A or Series B Preferred Stock, then the amount to
be paid or declared and set aside for payment shall be divided as between the
holders of the Series A Preferred and the holders of the Series B Preferred
in the same proportion as the aggregate preferential dividend payable to the
holders of the Series A Preferred bears to the aggregate preferential
dividend payable to the holders of the Series B Preferred.
(ii) COMMON STOCK. No dividends (other than those
payable solely in the Common Stock of the Corporation) shall be paid on any
Common Stock of the Corporation during any fiscal year of the Corporation until
dividends in the full preferential amounts set forth in Section 2(a)(i) hereof
shall have been paid to the holders of Preferred Stock or declared and set apart
for payment to the holders of Preferred Stock during such fiscal year.
(b) LIQUIDATION PREFERENCE.
(i) SERIES A PREFERRED, SERIES B PREFERRED AND
SERIES C PREFERRED LIQUIDATION PREFERENCE AMOUNT. In the event of any
liquidation, dissolution or winding up of the Corporation, either voluntary
or involuntary, the holders of the outstanding shares of Preferred Stock
shall be entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders of the
Common Stock or the holders of any other capital stock of the Corporation by
reason of their ownership thereof, (x) a per share amount equal to $4.20 per
share (as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series A Preferred) for
each share of Series A Preferred then held by them plus an amount equal to
all declared but unpaid dividends on the Series A Preferred (the "Series A
Preferred Liquidation Preference Amount"), (y) a per share amount equal to
$8.25 per
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share (as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series B Preferred) for
each share of Series B Preferred then held by them plus an amount equal to
all declared but unpaid dividends on the Series B Preferred (the "Series B
Preferred Liquidation Preference Amount") and (z) a per share amount equal to
$31.00 per share (as appropriately adjusted for any stock dividend, stock
split, recapitalization, consolidation or the like of the Series C Preferred)
for each share of Series C Preferred then held by them plus an amount equal
to all declared but unpaid dividends on the Series C Preferred (the "Series C
Preferred Liquidation Preference Amount"). If upon the occurrence of such
event, the assets and funds to be distributed among the holders of the
Preferred Stock shall be insufficient to permit the full payment of the
Series A Preferred Liquidation Preference Amount, the Series B Preferred
Liquidation Preference Amount and the Series C Preferred Liquidation
Preference Amount, then the holders of each share of Series C Preferred shall
be entitled to be paid first out of the assets and funds of the Corporation
legally available for distribution up to an amount equal to the Series C
Preferred Liquidation Preference Amount and then all remaining assets and
funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Series A Preferred and the
Series B Preferred (both of which shall be junior to the Series C Preferred
in liquidation) in proportion to the full preferential amount each such
holder is entitled to receive.
(ii) ADDITIONAL DISTRIBUTIONS. After the full
liquidation preference has been paid to the holders of the Preferred Stock
pursuant to subsection (b)(i) above, all remaining assets shall be distributed
to the holders of the Preferred Stock and Common Stock on a pro rata basis, as
if such Preferred Stock was converted to Common Stock; provided, that the
holders of the Series A Preferred, the Series B Preferred and the Series C
Preferred shall not be entitled to receive more than two times the Series A
Preferred Liquidation Preference Amount, the Series B Preferred Liquidation
Preference Amount or the Series C Preferred Liquidation Preference Amount,
respectively, by reason of their ownership of Preferred Stock (which includes
amounts paid pursuant to subsection (i) of subparagraph (b) above).
(iii) MERGER OR SALE SHALL BE A LIQUIDATION. A
consolidation or merger of the Corporation with or into any other entity, an
acquisition by any other entity, or a sale of all or substantially all of the
assets or voting control of the Corporation, in which the prior shareholders of
the Corporation do not own a majority of the outstanding shares of the surviving
entity after the transaction shall be deemed to be a liquidation, dissolution or
winding up within the meaning of Sections 2(b)(i) and, (ii) above.
(c) VOTING RIGHTS.
(i) GENERALLY. Except as otherwise required by law or
by subsection (iii) of this subparagraph (c) hereof, the holder of each share of
Preferred Stock shall be entitled to the number of votes equal to the number of
shares of Common Stock into which such shares of Preferred Stock could be
converted pursuant to subparagraph (d) hereof, and shall have full voting rights
and powers equal to the voting rights and powers of the Common Stock (voting
together with the Common Stock as a single class) and shall be entitled to
notice of any shareholders' meeting in accordance with the Bylaws of the
Corporation and applicable law. In the event the Preferred Stock
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is convertible into a non-integral number of shares of Common Stock, the
aggregate number of votes to which such shareholder is entitled shall be
rounded to the nearest whole vote.
(ii) BOARD OF DIRECTORS. So long as at least
435,000 shares of Series A Preferred (as appropriately adjusted for any stock
dividend, stock split, recapitalization, consolidation or the like of the
Series A Preferred) remain outstanding, the holders of the Series A Preferred
voting as a separate class shall be entitled to elect two directors and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors. So long as at least 545,454
shares of Series B Preferred (as appropriately adjusted for any stock
dividend, stock split, recapitalization, consolidation or the like of the
Series B Preferred) remain outstanding, the holders of the Series B Preferred
voting as a separate class shall be entitled to elect two directors and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors. So long as at least 272,727
shares of Series B Preferred (as appropriately adjusted for any stock
dividend, stock split, recapitalization, consolidation or the like of the
Series B Preferred) but not more than 545,453 shares of Series B Preferred
(as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series B Preferred) remain
outstanding, the holders of the Series B Preferred voting as a separate class
shall be entitled to elect one director and to remove from office such
director and to fill any vacancy caused by the resignation, death or removal
of such director. So long as at least 157,258 shares of Series C Preferred
(as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Series C Preferred) remain
outstanding, the holders of the Series C Preferred voting as a separate class
shall be entitled to elect one director and to remove from office such
director and to fill any vacancy caused by the resignation, death or removal
of such director. The holders of the Common Stock voting together as a single
class shall be entitled to elect two directors and to remove from office such
directors and to fill any vacancy caused by the resignation, death or removal
of such directors. If the holders of the Series A Preferred are no longer
entitled to elect two directors voting separately as a series, the holders of
the Common Stock, together with the holders of any series of Preferred Stock
that are not otherwise then entitled to elect a director voting as a series
pursuant to this Section, voting together as a single class on an
as-if-converted to Common Stock basis, shall be entitled to elect such
directors and to remove from office such directors and to fill any vacancy
caused by the resignation, death or removal of such directors. If the holders
of the Series B Preferred are no longer entitled to elect two directors
voting separately as a series but are entitled to elect one director voting
separately as a series, the holders of the Common Stock, together with the
holders of the Series B Preferred, the holders of the Series A Preferred if
they are not otherwise then entitled to elect two directors as a series
pursuant to this Section and the holders of the Series C Preferred, if they
are not otherwise then entitled to elect one director as a series pursuant to
this Section, voting together as a single class on an as-if-converted to
Common Stock basis, shall be entitled to elect the director previously
reserved for election by the holders of the Series B Preferred as a series,
and to remove from office such director and to fill any vacancy caused by the
resignation, death or removal of such director. If the holders of the Series
B Preferred are no longer entitled to elect two directors as a series, the
holders of the Common Stock, together with the holders of the Series B
Preferred, the holders of the Series A Preferred, if they are not otherwise
then entitled to
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elect two directors as a series pursuant to this Section, and the holders of
the Series C Preferred, if they are not otherwise then entitled to elect one
director as a series pursuant to this Section, voting together as a single
class on an as-if-converted to Common Stock basis, shall be entitled to elect
both directors previously reserved for election by the holders of the Series
B Preferred, and to remove from office such directors and to fill any vacancy
caused by the resignation, death or removal of such directors. If the holders
of the Series C Preferred are no longer entitled to elect one director voting
separately as a series, the holders of the Common Stock, together with the
holders of any series of Preferred Stock that are not otherwise then entitled
to elect a director voting as a series pursuant to this Section, voting
together as a single class on an as-if-converted to Common Stock basis, shall
be entitled to elect such directors and to remove from office such director
and to fill any vacancy caused by the resignation, death or removal of such
director.
(iii) CERTAIN RESTRICTIONS AND LIMITATIONS. In
addition to any other rights provided by law or herein:
(1) So long as at least 800,000 shares of
Preferred Stock (as appropriately adjusted for any stock dividend, stock split,
recapitalization, consolidation or the like of the Preferred Stock) remain
outstanding, consent of the holders of at least seventy five percent (75%) of
the Preferred Stock voting as a single class shall be required for any action
that:
(A) alters or changes the rights,
preferences or privileges of the Preferred Stock;
(B) creates (by reclassification or
otherwise) any new class or series of shares or any other securities convertible
into equity securities of the Corporation having rights, preferences or
privileges senior to or on a parity with the Preferred Stock; or
(C) amends, waives or repeals any
provision of, or adds any provision to, the Articles of Incorporation or Bylaws
of the Corporation in a manner which adversely affects the Preferred Stock.
(2) Consent of the holders of at least
seventy percent (70%) of the Preferred Stock voting as a single class shall
be required for any action that:
(A) increases or decreases the total
number of authorized shares of the Common Stock or the Preferred Stock;
(B) results in the redemption of any
shares of Common Stock (other than pursuant to equity incentive agreements
with employees, consultants, officers, directors and other service providers
that give the Corporation the right to repurchase shares of Common Stock upon
the termination of services);
(C) results in any merger, other
corporate reorganization, sale of control, or sale or other conveyance of all
or substantially all of the assets of the Corporation, as a result of which
the shareholders of the Corporation immediately prior to the consummation of
such transaction do not hold a majority of the voting power of the resulting
entity; provided, that if a
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holder of any equity security of the Corporation or an affiliate of such
holder is a party to such transaction (other than as a shareholder of the
Corporation or as an advisor to any party thereto), then the shares held by
such holder shall not be deemed to be outstanding for the purposes of such
approval;
(D) results in the declaration or
payment of any dividend on any shares of the Common Stock or the Preferred
Stock of the Corporation (other than dividends on Common Stock payable in
shares of Common Stock); or
(E) increases or decreases the size of
the Company's Board of Directors.
(3) Consent of the holders of at least seventy
percent (70%) of the Series B Preferred shall be required for any action that:
(A) increases or decreases the
total number of authorized shares of the Series B Preferred; or
(B) changes the rights,
preferences, privileges or restrictions of the Series B Preferred in a way that
adversely affects the Series B Preferred in a different manner than the Series A
Preferred.
(4) Consent of the holders of at least fifty
percent (50%) of the Series C Preferred shall be required for any action that:
(A) increases or decreases the total
number of authorized shares of the Series C Preferred; or
(B) changes the rights, preferences,
privileges or restrictions of the Series C Preferred in a way that adversely
affects the Series C Preferred.
(d) CONVERSION. The holders of the Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(i) RIGHT TO CONVERT.
(1) VOLUNTARY CONVERSION. Each share of
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for such stock, into such number of fully paid
and nonassessable shares of Common Stock at a rate (the "Conversion Rate") as is
determined by dividing (A) $4.20 in the case of the Series A Preferred,
(B) $8.25 in the case of the Series B Preferred and (C) $31.00 in the case of
the Series C Preferred, in each case by the then applicable Conversion Price
for such series of Preferred Stock, determined as hereinafter provided, in
effect at the time of the conversion. The Conversion Price of the Series A
Preferred shall initially be $4.20. The Conversion Price of the Series B
Preferred shall initially be $8.25. The Conversion Price of the
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Series C Preferred shall be $31.00. Such initial Conversion Prices shall be
subject to adjustment as hereinafter provided.
(2) AUTOMATIC CONVERSION. Each share of Series A
Preferred shall be automatically converted into shares of Common Stock at the
then effective applicable Conversion Rate (A) upon the consent of the holders
of at least seventy percent (70%) of the outstanding shares of the Series A
Preferred, or (B) upon the closing of the sale of the Corporation's Common
Stock in a firmly underwritten initial public offering registered under the
Securities Act of 1933, as amended (the "Act"), at a public offering price
equal to not less than $21.00 per share of Common Stock (as appropriately
adjusted for any stock dividend, stock split or combination,
recapitalization, consolidation or the like of the Common Stock) with
expected aggregate proceeds to the Corporation of not less than $15,000,000
before deduction of any underwriters' commissions and expenses (a "Qualified
IPO"). Each share of Series B Preferred shall be automatically converted into
shares of Common Stock at the then effective applicable Conversion Rate
(A) upon the consent of the holders of at least seventy percent (70%) of the
outstanding shares of the Series B Preferred, or (B) upon the closing of a
Qualified IPO. Each share of Series C Preferred shall be automatically
converted into shares of Common Stock at the then effective applicable
Conversion Rate (A) upon the consent of the holders of at least a majority of
the outstanding shares of the Series C Preferred, or (B) upon the closing of
an initial public offering at a Common Stock per share public offering price
equal to not less than $40.30 per share of Common Stock (appropriately
adjusted for any stock dividend, stock split or combination,
recapitalization, consolidation or the like of the Common Stock) with
expected aggregate proceeds to the Corporation of not less than $25,000,000
before deduction of any underwriters' commissions and expenses.
(ii) MECHANICS OF CONVERSION.
(1) EFFECTING CONVERSION. In order to effect a
voluntary conversion of Preferred Stock, such holder shall provide written
notice to the Corporation that he or she elects to convert the same into
Common Stock and deliver such notice to the office of the Corporation or of
any transfer agent for such shares. Such voluntary conversion shall be deemed
to have been made immediately prior to the close of business on the date of
surrender of the shares of Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on such date. In the case of an automatic
conversion in connection with an underwritten offering of securities under
the Act, the conversion may, at the option of any holder tendering shares of
Preferred Stock for conversion, be conditioned upon the closing with the
underwriter(s) of the sale of securities pursuant to such offering, in which
case the person or persons entitled to receive the Common Stock issuable upon
such conversion shall not be deemed to have converted such Preferred Stock
until immediately prior to the closing of such sale of securities.
(2) EXCHANGE OF CERTIFICATES. Before delivery to
any person of certificates representing shares of Common Stock issued upon
voluntary or automatic conversion of shares of the Preferred Stock, the
holder of such Preferred Stock shall surrender the certificate or
certificates for such Preferred Stock, duly endorsed, at the office of the
Corporation or of any
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transfer agent for such shares and shall provide a written declaration of the
name or names in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock, a certificate or certificates for the number of shares of
Common Stock to which he or she shall be entitled as aforesaid and a check
payable to the holder for any cash amounts payable as the result of a
conversion into fractional shares of Common Stock pursuant to subparagraph
2(d)(xii), and pay in cash or, to the extent sufficient funds are not then
legally available therefor, in Common Stock (at the Common Stock's fair
market value determined by the Board of Directors as of the date of such
conversion), any declared and unpaid dividends on the shares of Preferred
Stock being converted.
(iii) ADJUSTMENT FOR SUBDIVISIONS AND CERTAIN
DISTRIBUTIONS; ADJUSTMENTS FOR COMBINATIONS OR CONSOLIDATIONS OF COMMON STOCK
AND STOCK DIVIDENDS.
(1) In the event the outstanding shares of Common
Stock shall be subdivided (by stock split or otherwise) into a greater number
of shares of Common Stock, or a dividend or distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents" ) without payment of any consideration by such holder of the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend,
distribution, split or subdivision if no record date is fixed), the
Conversion Price of the Preferred Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be increased in proportion to such increase in
the aggregate numbers of shares issuable with respect to Common Stock
Equivalents, with the number of shares issuable with respect to Common Stock
Equivalents determined from time to time in the manner provided for deemed
issuances in subparagraph 2(d)(vi)(1)(E).
(2) 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 of the
Preferred Stock shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(iv) ADJUSTMENTS FOR OTHER DISTRIBUTIONS. In the event
the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive any
distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding
cash dividends) or options or rights not referred to in subparagraph
2(d)(iii)(1) hereof, then in each such event provision shall be made so that
the holders of Preferred Stock shall receive upon conversion thereof, in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation which they would have received had
their Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event
to and including the date of conversion, retained such securities receivable
by them as
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aforesaid during such period, subject to all other adjustments called for
during such period under this subparagraph 2(d) with respect to the rights of
the holders of the Preferred Stock.
(v) ADJUSTMENTS FOR REORGANIZATION, RECLASSIFICATION,
EXCHANGE AND SUBSTITUTION. If the Common Stock issuable upon conversion of
the Preferred Stock shall be changed into the same or a different number of
shares of any other class or classes of stock or other securities or
property, whether by reorganization (unless such reorganization is deemed a
liquidation under subparagraph 2(b)(iii) hereof), reclassification or
otherwise (other than a subdivision or combination of shares provided for
above), the Conversion Price of the Preferred Stock then in effect shall,
concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted such that the Preferred Stock
shall be convertible into, in lieu of the number of shares of Common Stock
which the holders would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock or other securities or
property equivalent to the number of shares of Common Stock that would have
been subject to receipt by the holders upon conversion of the Preferred Stock
immediately before such event; and, in any such case, appropriate adjustment
(as determined by the Board) shall be made in the application of the
provisions herein set forth with respect to the rights and interest
thereafter of the holders of the Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to change in
and other adjustments of the Conversion Price of the Preferred Stock) 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 Preferred Stock.
(vi) CONVERSION PRICE ADJUSTMENTS WITH RESPECT TO
CERTAIN DILUTING ISSUANCES. The Conversion Price of each series of Preferred
Stock shall be subject to adjustment from time to time as follows:
(1) (A) If the Corporation shall issue or be
deemed to issue any Additional Stock (as defined below) without consideration
or for a consideration per share less than the Conversion Price of a series
of Preferred Stock in effect immediately prior to the issuance of such
Additional Stock, then the Conversion Price of such series of Preferred Stock
in effect immediately prior to each such issuance shall (except as otherwise
provided in this clause (1)) be adjusted to:
a new Conversion Price determined by dividing (X) an amount
equal to the sum of (a) the product derived by multiplying the
Conversion Price of such series in effect immediately prior to such
issuance times the number of shares of Common Stock (including shares
of Common Stock issued or issuable upon conversion of the outstanding
Preferred Stock or otherwise under Section 2(d)(vi)(1)(E)) outstanding
immediately prior to such issue, plus (b) the consideration, if any,
received by or deemed to have been received by the Corporation upon
such issuance, by (Y) an amount equal to the sum of (c) the number of
shares of Common Stock (including shares of Common Stock issued or
issuable upon conversion of the outstanding Preferred Stock or
otherwise under Section 2(d)(vi)(1)(E)) outstanding immediately prior
to such issuance, plus (d) the number of shares of Common Stock issued
or deemed to have been issued in such issuance; provided, however, that
if in the
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>
Corporation's next financing transaction (i) consisting of a
private placement of $7,500,000 or more of equity securities led and
negotiated (including the negotiation of the terms, conditions and
pricing) by a financial or venture capital investor, Additional Stock
is issued without consideration or for consideration per share less
than the then-applicable Series C Preferred Conversion Price, the
Series C Conversion Price shall be adjusted to the consideration per
share received by the Corporation with respect to such Additional
Stock, or (ii) consisting of a public offering, Additional Stock is
issued without consideration or for consideration per share less than
the then-applicable Series C Preferred Conversion Price, the Series C
Conversion Price shall be adjusted to eighty percent (80%) of the
consideration per share paid by the public with respect to such
Additional Stock, all to be calculated as though the securities issued
in the public offering were issued immediately prior to the closing of
the public offering and conversion of the Series C Preferred.
(B) No adjustment of the Conversion Price for
any series of Preferred Stock shall be made in an amount less than one cent
($0.01) per share, provided that any adjustment that is not required to be
made by reason of this sentence shall be carried forward and taken into
account in any subsequent adjustment to the Conversion Price for such series
of Preferred Stock. Except to the limited extent provided for in
Sections 2(d)(vi)(1)(E)(z) and 2(d)(vi)(1)(E)(aa), no adjustment of such
Conversion Price shall have the effect of increasing the Conversion Price
above the Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of
securities of the Corporation for cash, the consideration shall be deemed to
be the amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by this
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(D) In the case of the issuance of
securities of the Corporation for a consideration in whole or in part other
than cash, the consideration other than cash shall be deemed to be the fair
market value thereof as determined by the Board of Directors.
(E) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock or options to purchase or
rights to subscribe for such convertible or exchangeable securities (where
the shares of Common Stock issuable upon exercise of such options or rights
or upon conversion or exchange of such securities are not excluded from the
definition of Additional Stock), the following provisions shall apply:
(x) the aggregate maximum number of
shares of Common Stock deliverable upon exercise of such options to purchase
or rights to subscribe for Common Stock shall be deemed to have been issued
at the time such options or rights were issued and for a consideration equal
to the consideration (determined in the manner provided in Sections
2(d)(vi)(1)(C) and 2(d)(vi)(1)(D)), if any, received by the Corporation upon
the issuance of such options or rights plus the minimum purchase price
provided in such options or rights for the Common Stock covered thereby;
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(y) the aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities or upon the exercise of options
to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to
have been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration, if
any, received by the Corporation for any such securities and related options
or rights (excluding any cash received on account of accrued interest or
accrued dividends), plus the additional consideration, if any, to be received
by the Corporation upon the conversion or exchange of such securities or the
exercise of any related options or rights (the consideration in each case to
be determined in the manner provided in Sections 2(d)(vi)(1)(C) and
2(d)(vi)(1)(D));
(z) In the event of any change in
the number of shares of Common Stock deliverable upon exercise of such options
or rights or upon conversion of or in exchange for such convertible or
exchangeable securities, including, but not limited to, a change resulting from
the antidilution provisions thereof, the Conversion Price in effect at the time
for each series of Preferred Stock shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment that was made upon
the issuance of such options, rights or securities not converted prior to such
change or the options or rights related to such securities not converted prior
to such change been made upon the basis of such change, but no further
adjustment shall be made for the actual issuance of Common Stock upon the
exercise of any such options or rights or the conversion or exchange of such
securities;
(aa) Upon the expiration of any
such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price for each series
of Preferred Stock shall forthwith be readjusted to such Conversion Price as
would have obtained had the adjustment which was made upon the issuance of
such options, rights or securities or options or rights related to such
securities been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities.
(2) "Effective Date" with respect to each
series of Preferred Stock means the first date on which shares of such series of
Preferred Stock were issued.
(3) "Additional Stock" shall mean any shares
of Common Stock issued (or deemed to have been issued pursuant to Section
2(d)(vi)(1)(E)) by the Corporation after the Effective Date other than:
(A) Common Stock issued pursuant to a
transaction described in Section 2(d)(iii).
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(B) Shares of Common Stock
issued or issuable to employees, officers, or directors of, or consultants
to, the Corporation, approved by at least sixty-five percent (65%) of the
members of the Board of Directors.
(C) Common Stock issued or issuable
upon conversion of the shares of Preferred Stock.
(vii) NO IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this subparagraph 2(d)
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 Preferred Stock
against impairment.
(viii) CERTIFICATES AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Conversion Price of any
series of Preferred Stock pursuant to this subparagraph 2(d), the Corporation
at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Preferred Stock a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Corporation shall, upon the written request at any time of any
holder of Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (1) such applicable adjustments and
readjustments, (2) the applicable Conversion Price at the time in effect, and
(3) the number of shares of Common Stock and the amount, if any, of other
property that at the time would be received upon the conversion of Preferred
Stock. Any certificate sent to the holders of Preferred Stock pursuant to
this subparagraph shall be signed by an officer of the Corporation.
(ix) NOTICES OF RECORD DATE. In the event of any taking
by the Corporation of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, any security or right convertible into or
entitling the holder thereof to receive Common Stock, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right, the
Corporation shall mail to each holder of record of Preferred Stock at least
fifteen (15) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution, security or right, and the amount and character of
such dividend, distribution, security or right. In addition, the Corporation
shall mail to each holder of record of Preferred Stock a notice specifying
that a liquidation, dissolution or winding up, or a merger, sale of assets or
change of control transaction involving the Corporation is to occur (or so
deemed pursuant to Section 2(b)(iii) hereof), such notice to be mailed at
least fifteen (15) days prior to the date on which any such action is
expected to be consummated.
(x) ISSUE TAXES. The Corporation shall pay any and all
issue and other taxes that may be payable in respect of any issue or delivery
of shares of Common Stock on
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conversion of shares of Preferred Stock pursuant hereto; provided, however,
that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any
such conversion.
(xi) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of
Preferred Stock then, in addition to such other remedies as shall be
available to the holders of Preferred Stock, the Corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose.
(xii) FRACTIONAL SHARES. No fractional share shall be
issued upon the conversion of any share or shares of Preferred Stock. If the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay
the holder otherwise entitled to such fraction a sum in cash equal to the
fair market value of such fraction on the date of conversion (as determined
in good faith by the Board of Directors of the Corporation).
(e) NOTICES. The Corporation shall give each holder of
Preferred Stock at least fifteen (15) days prior written notice of any date
(i) for the determination of the distribution of assets in connection with any
liquidation, dissolution or winding up of the Corporation, or (ii) on which
automatic conversion is expected to occur. Any notice required by the provisions
of these Articles to be given to the holders of shares of Preferred Stock shall
be deemed given if delivered personally or deposited in the United States mail,
first class postage prepaid (or, if to an international addressee, sent by
express messenger specifying not more than three days' delivery), and addressed
to each holder of record at his or her address appearing on the books of the
Corporation.
(f) CERTAIN REPURCHASES. Each holder of an outstanding share
of Preferred Stock shall be deemed to have consented, for purposes of Sections
502, 503 and 506 of the General Corporation Law, to distributions made by the
Corporation in connection with the repurchase, at the initial purchase price
thereof, or at such other price as may be approved by the Board of Directors, of
shares of Common Stock issued to or held by officers, directors, employees or
consultants upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such persons.
IV.
1. LIMITATION OF DIRECTORS' LIABILITY. The liability of the directors
of this corporation for monetary damages shall be eliminated to the fullest
extent permissible under California law.
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2. INDEMNIFICATION OF CORPORATE AGENTS. This corporation is authorized
to provide indemnification of its agents (as defined in Section 317 of the
California General Corporations Law) through bylaw provisions, agreements with
agents, vote of shareholders or disinterested directors, or otherwise, in excess
of the indemnification otherwise permitted by such Section 317, subject only to
the limits set forth in Section 204 of the California General Corporations Law
with respect to actions for breach of duty to the corporation and its
shareholders.
3. REPEAL OR MODIFICATION. Any repeal or modification of the foregoing
provisions of this Article IV shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification."
* * *
C. The foregoing amendment and restatement has been duly approved by
the Board of Directors of the Company.
D. The foregoing amendment has been duly approved by the required vote
of shareholders in accordance with Sections 902 and 903 of the California
General Corporations Law. The total number of outstanding shares is 2,159,148
shares of Common Stock, 1,451,195 shares of Series A Preferred Stock and
1,818,182 shares of Series B Preferred Stock. The number of shares voting in
favor of the amendment equaled or exceeded the votes required. The percentage
vote was more than 50% of the outstanding Common Stock and more than 75% of the
outstanding Series A Preferred Stock and Series B Preferred Stock voting
together as a single class.
We further declare under penalty of perjury under the laws of
California that the matters set forth in this amendment and restatement are true
of our own knowledge.
Executed at Palo Alto, California on March 17, 2000.
/s/ Daniel V. Santi
-----------------------------------------
Daniel V. Santi, Chief Executive Officer
/s/ Blair W. Stewart
-----------------------------------------
Blair W. Stewart, Jr., Secretary
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