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EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
KOSAN BIOSCIENCES INCORPORATED
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I.
The name of this Corporation is Kosan Biosciences Incorporated (the
"Corporation").
II.
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle. The name of
its registered agent at such office is The Corporation Trust Company.
III.
The nature of the business or purposes to be conducted or promoted by
this Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
IV.
1. AUTHORIZATION TO ISSUE TWO CLASSES. The total number of shares of all
classes of stock which the Corporation is authorized to issue is 16,348,182,
consisting of 12,000,000 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").
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 $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,
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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 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
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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 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.
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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 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
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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
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
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(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 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
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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
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.
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(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 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
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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
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
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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;
(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
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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).
(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
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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 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
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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.
V.
The Corporation is to have perpetual existence.
VI.
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in the Board of Directors.
2. In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of the Corporation.
3. Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before voting
begins or unless the Bylaws of the Corporation shall so provide.
VII.
1. To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as may hereafter be amended, a director of the Corporation
shall not be personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
2. The Corporation may indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director, officer, employee or agent of
the Corporation or any predecessor of the Corporation or serves or served at any
other enterprise as a director, officer, employee or agent at the request of the
Corporation or any predecessor to the Corporation.
3. Neither any amendment nor repeal of this Article VII, nor the adoption
of any provision of this Corporation's Certificate of Incorporation inconsistent
with this Article VII, shall eliminate or reduce the effect of this Article VII,
in respect of any matter occurring, or any action or proceeding accruing or
arising or that, but for this Article VII, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
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VIII.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
IX.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
X.
The name and mailing address of the incorporator are as follows:
Jason Brandwene, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is the act and deed of such incorporator and that
the facts stated therein are true.
/s/ Jason Brandwene
-----------------------------
Jason Brandwene, Incorporator
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