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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF KYPHON INC.
A Delaware Corporation
Kyphon Inc., a corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
A. The name of this corporation is Kyphon Inc. The original Certificate
of Incorporation was filed with the Secretary of the State of Delaware on
January 10, 1994.
B. Pursuant to Sections 228, 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
C. The text of the Certificate of Incorporation as heretofore amended or
supplemented is hereby amended and restated as follows:
I.
The name of this corporation is Kyphon Inc. (the "corporation")
II.
The address of the registered office of the corporation in the State of
Delaware is 32 Lockerman Square, Suite L-100, in the City of Dover, County of
Kent. The name of its registered agent at such address is The Prentice-Hall
Corporation System, Inc.
III.
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
IV.
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is 65,438,116
shares. 40,000,000 shares shall be Common Stock with a par value of $0.001 per
share. 25,438,116 shares shall be Preferred Stock with a par value of $0.001
per share. 3,065,000 shares of Preferred Stock are hereby designated "Series A
Preferred Stock," 3,466,872 shares of Preferred Stock are hereby designated
"Series B Preferred Stock," 4,772,654 shares of Preferred Stock are hereby
designated "Series C Preferred Stock," 6,633,590 shares of Preferred Stock are
hereby designated "Series D Preferred Stock," and 7,500,000 shares of Preferred
Stock are hereby designated "Series E Preferred Stock."
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V.
The rights, preferences, privileges and restrictions granted to or imposed
upon the Common Stock and Preferred Stock are as follows:
1. Dividend Provisions. The holders of shares of Preferred Stock shall be
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entitled to receive dividends, out of any assets legally available therefor,
prior and in preference to any declaration or payment of any dividend (payable
other than in Common Stock or other securities and rights convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of this corporation) on the Common Stock of this
corporation, at the rate of (i) $0.028 per share of Series A Preferred Stock,
(ii) $0.028 per share of Series B Preferred Stock, (iii) $0.042 per share of
Series C Preferred Stock, (iv) $0.105 per share of Series D Preferred Stock and
(v) $0.247 per share of Series E Preferred Stock per annum or, if greater (as
determined on a per annum basis and on an as converted basis for each Series of
Preferred Stock), an amount equal to that paid on the Common Stock. Such
dividends shall be payable, in cash, when, as and if declared by the Board of
Directors, and shall not be cumulative, and no right shall accrue to holders of
Common Stock or Preferred Stock by reason of the fact that dividends on said
shares are not declared in any prior period. All dividends declared upon the
Preferred Stock shall be declared pro rata per share.
2. Liquidation Preference.
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(a) Preference. In the event of any liquidation, dissolution or
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winding up of this corporation, either voluntary or involuntary, the holders of
Series B, Series C, Series D and Series E Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this corporation to the holders of Common Stock and Series A Preferred Stock by
reason of their ownership thereof, an amount per share equal to $0.35, $0.525,
$1.31 and $3.09 for each outstanding share of Series B, Series C, Series D and
Series E Preferred Stock, respectively, plus an amount, in cash, equal to any
declared but unpaid dividends on such share up to the date fixed for
distribution. If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series B, Series C, Series D and Series E
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then the entire assets and funds of
this corporation legally available for distribution shall be distributed ratably
(based upon amounts owed in full satisfaction of the liquidation preference)
among the holders of the Series B, Series C, Series D and Series E Preferred
Stock.
After the payment of the preferential amount to the Series B, Series
C, Series D and Series E Preferred Stock, the Series A Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of this corporation to the holders of Common Stock by reason of their
ownership thereof, an amount per share equal to $0.35 for each outstanding share
of Series A Preferred Stock plus an amount equal to any declared but unpaid
dividends on such share up to the date fixed for distribution. If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of this corporation legally available for distribution
to the Series A Preferred Stock shall be distributed ratably among the holders
of Series A Preferred Stock in proportion to the aggregate Series A liquidation
preference.
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After the distributions to the holders of Preferred Stock have been made,
the remaining assets of the corporation available for distribution to
stockholders shall be distributed pro rata among the holders of Common Stock.
(b) Mergers. A merger, reorganization, or sale of all or
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substantially all of the assets of this corporation in which the stockholders of
this corporation immediately prior to the transaction possess less than 50% of
the voting power of the surviving entity (or its parent) immediately after the
transaction shall be deemed to be a liquidation, dissolution or winding up
within the meaning of this Section 2; provided that the holders of Preferred
Stock and Common Stock shall be paid in cash or in securities received or in a
combination thereof (which combination shall be in the same proportions as the
consideration received in the transaction); and provided further that the Series
A Preferred Stock shall not be entitled to its liquidation preference described
in Section 2(a) but instead will be treated as if previously converted into
Common Stock. Any securities to be delivered to the holders of the Preferred
Stock and Common Stock upon merger, reorganization or sale of substantially all
the assets of the corporation shall be valued as follows:
(i) if traded on a securities exchange, the value shall be
deemed to be the average of the closing prices of the securities on such
exchange over the 15-day period ending three (3) business days prior to the
closing;
(ii) if actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid prices over the 15-day period ending
three (3) business days prior to the closing; and
(iii) if there is no active public market, the value shall be the
fair market value thereof as mutually determined by the corporation and the
holders of not less than a majority of the outstanding shares of Preferred
Stock, voting as a single class, provided that if the corporation and the
holders of a majority of the outstanding shares of Preferred Stock are unable to
reach agreement, then by independent appraisal by an investment banker hired and
paid by the corporation, but acceptable to the holders of a majority of the
outstanding shares of Preferred Stock.
3. Conversion. The holders of the Preferred Stock shall have
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conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
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convertible into share(s) of Common Stock without the payment of any additional
consideration by the holder thereof and, 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 the Preferred Stock. Each share of Series
A, Series B, Series C, Series D and Series E Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of Common
Stock which results from dividing the Conversion Price (as hereinafter defined)
per share in effect for the Series A, Series B, Series C, Series D and Series E
Preferred Stock at the time of conversion into the per share Conversion Value
(as hereinafter defined) of such series. The initial Conversion Price per share
of Series A Preferred Stock shall be $0.35, and the Conversion Value per share
of the Series A Preferred Stock shall be $0.35. The initial Conversion Price per
share of Series B Preferred Stock shall be $0.35, and the Conversion Value per
share of the Series B Preferred Stock shall be $0.35. The initial Conversion
Price per share of Series C
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Preferred Stock shall be $0.525, and the Conversion Value per share of the
Series C Preferred Stock shall be $0.525. The initial Conversion Price per share
of Series D Preferred Stock shall be $1.31, and the Conversion Value per share
of the Series D Preferred Stock shall be $1.31. The initial Conversion Price per
share of Series E Preferred Stock shall be $3.09, and the Conversion Value per
share of the Series E Preferred Stock shall be $3.09. The Conversion Prices of
each series of Preferred Stock shall be subject to adjustment from time to time
as provided below. The number of shares of Common Stock into which a share of
Series A, Series B, Series C, Series D or Series E Preferred Stock is
convertible is hereinafter referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion of Series A Preferred Stock. Once less than
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500,000 shares of Series B, Series C, Series D or Series E Preferred Stock are
outstanding each share of Series A Preferred Stock then outstanding shall
automatically be converted into shares of Common Stock at its then effective
conversion rate.
(c) Automatic Conversion. Each share of Preferred Stock shall
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automatically be converted into shares of Common Stock at its then effective
Conversion Rate immediately upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
in which (a) the public offering price equals or exceeds $6.18 per share
(adjusted to reflect subsequent stock dividends, stock splits or
recapitalization) and (b) the aggregate proceeds raised equals or exceeds
$15,000,000.
(d) Mechanics of Conversion. Before any holder of Preferred Stock
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shall be entitled to convert the same into shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Preferred Stock and shall
give written notice to the corporation at such office that he elects to convert
the same (except that no such written notice of election to convert shall be
necessary in the event of an automatic conversion pursuant to Section 3(b) or
(c) hereof). 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 such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted (except that in the case of an
automatic conversion pursuant to Section 3(b) or (c) hereof such conversion
shall be deemed to have been made immediately prior to the conversion of Series
A Preferred Stock or the closing of the offering referred to in Sections 3(b)
and 3(c), respectively), 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.
(e) Fractional Shares. In lieu of any fractional shares to which the
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holder of Preferred Stock would otherwise be entitled, the corporation shall pay
cash equal to such fraction multiplied by the fair market value of one share of
Preferred Stock as determined by the board of directors of the corporation.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Preferred Stock of each
holder to be converted at such time into Common Stock and the number of shares
of Common Stock issuable upon such aggregate conversion.
(f) Adjustment of Conversion Price. The Conversion Prices of
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Preferred Stock shall be subject to adjustment from time to time as follows:
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(i) With regard to Preferred Stock (other than Series A
Preferred Stock), if the corporation shall issue any Common Stock other than
"Excluded Stock," as defined below, for a consideration per share less than the
Conversion Price of a series of the Preferred Stock in effect immediately prior
to the issuance of such Common Stock (excluding Stock dividends, subdivisions,
split-ups, combinations, dividends or recapitalizations which are covered by
Section 3(e)(iii), (iv), (v) and (vi)), the Conversion Price of such series in
effect immediately after each such issuance shall forthwith (except as provided
in this Section 3(f)) be adjusted to a price equal to the quotient obtained by
dividing:
(A) an amount equal to the sum of
(x) the total number of shares of Common Stock
outstanding (including any shares of Common Stock issuable upon conversion of
the Preferred Stock, or deemed to have been issued pursuant to subdivision (3)
of this clause (i) and to clause (ii) below) immediately prior to such issuance
multiplied by the Conversion Price of such series in effect immediately prior to
such issuance, plus
(y) the consideration received by the corporation upon
such issuance, by
(B) the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon conversion of the Preferred
Stock or deemed to have been issued pursuant to subdivision (3) of this clause
(i) and to clause (ii) below) immediately prior to such issuance plus the
additional shares of Common Stock issued in such issuance (but not including any
additional shares of Common Stock deemed to be issued as a result of any
adjustment in the Conversion Price resulting from such issuance).
For purposes of any adjustment of the Conversion Price
pursuant to this clause (i), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
after deducting any discounts or commissions paid or incurred by the corporation
in connection with the issuance and sale thereof.
(2) In the case of the issuance of Common Stock 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 of the corporation, in accordance with generally accepted
accounting treatment; provided, however, that if, at the time of such
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determination, the corporation's Common Stock is traded in the over-the-counter
market or on a national or regional securities exchange, such fair market value
as determined by the board of directors of the corporation shall not exceed the
aggregate "Current Market Price" (as defined below) of the shares of Common
Stock being issued.
(3) In the case of the issuance of (i) options to
purchase or rights to subscribe for Common Stock (other than Excluded Stock),
(ii) securities by their terms convertible into or exchangeable for Common Stock
(other than Excluded Stock), or (iii) options to purchase or rights to subscribe
for such convertible or exchangeable securities:
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(A) 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 subdivisions (1) and (2) above), 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;
(B) 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 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
minimum 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 subdivisions (1) and (2) above);
(C) on any change in the number of shares of
Common Stock deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable securities, or on
any change in the minimum purchase price of such options, rights or securities,
other than a change resulting from the antidilution provisions of such options,
rights or securities, the Conversion Price shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon (x) the
issuance of such options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been made upon the basis of
such change or (y) the options or rights related to such securities not
converted or exchanged prior to such change, as the case may be, been made upon
the basis of such change; and
(D) on 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 shall forthwith be readjusted to such
Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, 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 convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(ii) "Excluded Stock" shall mean:
(A) all shares of Common Stock issued and outstanding on
the date this document is filed with the Delaware Secretary of State and all
shares issuable upon exercise of
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options or warrants outstanding on the date this document is filed with the
Delaware Secretary of State;
(B) all shares of Series A, Series B, Series C, Series D
or Series E Preferred Stock issued prior to or as a result of the filing of this
Certificate with the Delaware Secretary of State and the Common Stock into which
such shares of Preferred Stock are convertible; and
(C) all shares of Common Stock, warrants or options to
purchase Common Stock or other securities issued to officers, directors,
consultants or employees of the corporation pursuant to any plan or arrangement
approved by the board of directors of the corporation.
All outstanding shares of Excluded Stock (including any
shares issuable upon conversion of the Preferred Stock) shall be deemed to be
outstanding for all purposes of the computations of Section 3(f)(i) above.
(iii) If the number of shares of Common Stock outstanding at
any time after the date hereof is increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of Common
Stock, then, on the date such payment is made or such change is effective, the
Conversion Price of Series A, Series B, Series C, Series D and Series E
Preferred Stock shall be appropriately decreased so that the number of shares of
Common Stock issuable on conversion of any shares of such series of Preferred
Stock shall be increased in proportion to such increase of outstanding shares.
(iv) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, on the effective date of such combination, the
Conversion Prices of Series A, Series B, Series C, Series D and Series E
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of any shares of such series of Preferred
Stock shall be decreased in proportion to such decrease in outstanding shares.
(v) In case the corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of Series A, Series B, Series C, Series D or Series E Preferred Stock
shall, concurrent with the distribution to holders of Common Stock, receive a
like distribution based upon the number of shares of Common Stock into which
such series of Preferred Stock is convertible.
(vi) In case, at any time after the date hereof, of any capital
reorganization, or any reclassification of the stock of the corporation (other
than as a result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the corporation with or into another
person (other than a consolidation or merger in which the corporation is the
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continuing entity and which does not result in any change in the Common Stock),
or of the sale or other disposition of all or substantially all the properties
and assets of the corporation, the shares of Preferred Stock shall, after such
reorganization, reclassification, consolidation, merger, sale or other
disposition, be convertible into the kind and number of shares of stock or other
securities or property of the corporation or otherwise to which such holder
would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition he had
converted his shares of Preferred Stock into Common Stock. The provisions of
this clause (vi) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other dispositions.
(vii) All calculations under this Section 3 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.
(viii) For the purpose of any computation pursuant to this
Section 3(f), the "Current Market Price" at any date of one share of Common
Stock, shall be deemed to be the average of the highest reported bid and the
lowest reported offer prices on the preceding business day as furnished by the
National Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded in such
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manner that the quotations referred to in this clause (viii) are available for
the period required hereunder, Current Market Price shall be determined in good
faith by the board of directors of the corporation, but if challenged by the
holders of more than 50% of the outstanding shares of Preferred Stock, as a
single class, then as determined by an independent appraiser selected by the
board of directors of the corporation, the cost of such appraisal to be borne by
the challenging parties.
(g) Minimal Adjustments. No adjustment in the Conversion Price need
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be made if such adjustment would result in a change in the Conversion Price of
less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Conversion Price.
(h) No Impairment. Without the consent of the majority of the
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outstanding shares of Preferred Stock, the corporation will not 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 Section 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Preferred Stock against impairment.
(i) Certificate as to Adjustments. Upon the occurrence of each
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adjustment or readjustment of the Conversion Rate pursuant to this Section 3,
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 written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate of such series at the time in effect, and (iii) the
number of
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shares of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversions of such holder's shares of Preferred
Stock.
(j) Notices of Record Date. In the event of any taking by the
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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 (other than a cash dividend) or other distribution, 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 Preferred Stock at least ten (10) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(k) Reservation of Stock Issuable Upon Conversion. The corporation
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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 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, 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.
(l) Notices. Any notice required by the provisions of this Section 3
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to be given to the holder of shares of Preferred Stock shall be deemed given if
deposited in the United States mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the corporation.
(m) Reissuance of Converted Shares. No shares of Preferred Stock
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which have been converted into Common Stock after the original issuance thereof
shall ever again be reissued and all such shares so converted shall upon such
conversion cease to be a part of the authorized shares of the corporation.
4. Redemption of Preferred Stock.
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(a) For so long as any shares of Preferred Stock remain outstanding,
each holder of Preferred Stock may, at the election of a majority of Preferred
Stock, voting as a single class, on each of December 31, 2004, December 31, 2005
and December 31, 2006, or such later dates as such holders of Preferred Stock
determine (each a "Redemption Date"), require the corporation to redeem, on each
of the first, second and third Redemption Dates, a number of shares of Preferred
Stock equal to one third, two-thirds and all, respectively of the number of
shares of the Preferred Stock held by such holder. The price per share payable
upon redemption of the Preferred Stock shall be equal to the Conversion Value of
each series of Preferred Stock subject to redemption (the "Redemption Price").
(b) If the funds of the Corporation legally available for redemption
of shares of the Preferred Stock on the Redemption Date are insufficient to
redeem the total number of shares of the Preferred Stock requested to be
redeemed on such date, the corporation shall use those funds which
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are legally available to redeem the maximum possible number of such shares
ratably (based upon the aggregate Redemption Price) among the holders of such
shares that are required to be redeemed on such Redemption Date. The shares of
the Preferred Stock not redeemed shall remain outstanding and entitled to all
the rights and preferences provided herein. At any time thereafter when
additional funds of the corporation are legally available for the redemption of
shares of the Preferred Stock, such funds will immediately be used to redeem the
balance of, or if not sufficient to redeem the full balance, ratably (based upon
the aggregate Redemption Price) among the shares that are required to be
redeemed on such Redemption Date, the shares which the corporation has become
obligated to redeem on the relevant Redemption Date but which it has not
redeemed.
(c) On or after a Redemption Date each holder of shares of Preferred
Stock being redeemed shall surrender such holder's certificates representing the
shares to be redeemed and thereupon the Redemption Price of such shares shall be
payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof. From and after such Redemption Date, unless
there shall have been a default in payment of such Redemption Price or the
corporation is unable to pay such Redemption Price due to not having sufficient
legally available funds (in which case such shares of Preferred Stock shall, as
provided in Section 4(b) above, remain outstanding and be entitled to all the
rights and preferences provided herein), all rights of the holders (except the
right to receive the appropriate Redemption Price (calculated in the manner
described in Section 4(a) above) with respect to such shares through the
Redemption Date upon surrender of their certificates), shall cease and terminate
with respect to such shares. If less than all of the shares represented by such
certificate are redeemed, then the corporation shall issue a new certificate
representing the unredeemed shares.
5. Voting Rights.
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(a) General. There shall be no cumulative voting. The holders of the
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Common Stock are entitled to one vote for each share held at all meetings of
stockholders. The holder of each share of Series A, Series B, Series C, Series D
and Series E Preferred Stock shall be entitled to the number of votes equal to
the largest number of full shares of Common Stock into which each share of such
series of Preferred Stock could be converted on the record date for the vote or
written consent of stockholders and, except as otherwise required by law, shall
have voting rights and powers equal to the voting rights and powers of the
Common Stock. The holder of each share of Series A, Series B, Series C, Series D
and Series E Preferred Stock shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of the corporation and shall vote with
holders of the Common Stock upon all other matters submitted to a vote of
stockholders, except those matters required pursuant to Section 6 or by law to
be submitted to a class or series vote. Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula
(after aggregating all shares of Common Stock into which shares of Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half rounded upward to one).
(b) Board of Directors. Notwithstanding the foregoing, the holders
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of the Series B, Series C, Series D and Series E Preferred Stock, voting
together as a single class, shall be entitled to elect three directors of the
corporation, the holders of the Common Stock and Series A Preferred Stock,
voting together as a single class, shall be entitled to elect two directors, and
the holders of Common Stock and Series A, Series B, Series C, Series D and
Series E Preferred Stock voting
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<PAGE>
together as a single class, shall be entitled to elect all remaining directors.
Notwithstanding any Bylaw provision to the contrary, the stockholders entitled
to elect a particular director shall be entitled to remove such director or to
fill a vacancy in the seat formerly held by such director, all in accordance
with the applicable provisions of the Delaware General Corporation Law.
6. Protective Provisions. When a series of Preferred Stock is adversely
---------------------
affected by an amendment to this Certificate in a different manner than other
shares of Preferred Stock, approval of the holders of at least a two-thirds of
the then outstanding shares of the adversely affected series of Preferred Stock
shall be required. In addition to any other class vote that may be required by
law, so long as any shares of Preferred Stock are outstanding, this corporation
shall not without first obtaining the approval (by vote or written consent, as
provided by law) of the holders of at least two-thirds of the then outstanding
shares of Preferred Stock:
(a) sell, convey or otherwise dispose of all or substantially all of
its property or business, or merge into or effect a reorganization with any
other corporation (other than a wholly owned subsidiary corporation) in which
the stockholders of this corporation immediately prior to the transaction
possess less than 50% of the voting power of the surviving entity (or its
parent) immediately after the transaction, or authorize or effect the
acquisition by the corporation of another corporation by means of a purchase of
all or substantially all of the capital stock or assets of such corporation, or
authorize or effect a liquidation, winding up, dissolution or adoption of any
plan for the same.
(b) change the rights, preferences, privileges or restrictions of the
Preferred Stock, including the authorization or issuance of any series of
Preferred Stock with preference or priority over, or being on a parity with the
Series B, Series C, Series D or Series E Preferred Stock as to the right to
receive either dividends or amounts distributable upon liquidation, dissolution
or winding up of the corporation;
(c) increase or decrease the aggregate number of authorized shares of
Preferred Stock, other than as provided in Section 161 of the Delaware General
Corporation Law;
(d) create a new class or series of shares having rights, preferences
or privileges or increase the number of authorized shares of any class or shares
having rights, preferences or privileges prior to any outstanding class or
series;
(e) increase the authorized number of directors of the corporation to
a number greater than nine;
(f) engage in transactions with affiliates without the affirmative
vote of a majority of disinterested directors;
(g) amend or repeal any provision of the corporation's Certificate of
Incorporation; or
(h) authorize or effect the payment of dividends or the redemption or
repurchase of any capital stock of the corporation or rights to acquire capital
stock of the corporation (other than the repurchase of stock from employees of
the corporation or its subsidiaries pursuant to repurchase rights under vesting
provisions related to the length of period of employment of such employees at
purchase prices initially paid by such employees for shares).
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<PAGE>
7. Common Stock. The voting, dividend and liquidation rights of the
------------
holders of the Common Stock are subject to and qualified by the rights of the
holders of the Preferred Stock.
8. Miscellaneous Provisions.
------------------------
(a) The corporation is to have perpetual existence.
(b) 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.
(c) The election of directors need not be by written ballot unless
the Bylaws of the corporation shall so provide.
(d) 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 provisions contained in the statutes) outside 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.
(e) Advance notice of new business and stockholder nomination for the
election of directors shall be given in the manner and to the extent provided in
the Bylaws of the corporation.
(f) 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.
VI.
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. Neither any
amendment nor repeal of this Article, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article, shall eliminate or
reduce the effect of this Article in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent
provision."
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<PAGE>
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by its duly authorized representative, Richard D. Murdock, its President,
this 13th day of December, 1999.
KYPHON INC.
/s/ RICHARD D. MURDOCK
------------------------------------------
Richard D. Murdock, President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * * *
Kyphon Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the unanimous
written consent of its members, filed with the minutes of the Board, adopted a
resolution proposing and declaring advisable the following amendment to the
Amended and Restated Certificate of Incorporation of said corporation:
RESOLVED, that the Amended and Restated Certificate of Incorporation of
December 13, 1999 be amended by changing Section C, Point IV to read in its
entirety as follows:
"This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is 66,438,116
shares. 40,000,000 shares shall be Common Stock with a par value of $0.001
per share. 26,438,116 shares shall be Preferred Stock with a par value of
$0.001 per share. 3,065,000 shares of Preferred Stock are hereby
designated "Series A Preferred Stock," 3,466,872 shares of Preferred Stock
are hereby designated "Series B Preferred Stock," 4,772,654 shares of
Preferred Stock are hereby designated "Series C Preferred Stock," 6,633,590
shares of Preferred Stock are hereby designated "Series D Preferred Stock,"
and 8,500,000 shares of Preferred Stock are hereby designated "Series E
Preferred Stock.""
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with
the provisions of Section 228 of the General Corporation Law of the State of
Delaware, and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to
<PAGE>
every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
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<PAGE>
IN WITNESS WHEREOF, the corporation has caused this Certificate to be
signed by its duly authorized representative, Richard D. Murdock, its President,
this _____ day of January, 2000.
KYPHON INC.
/s/ RICHARD D. MURDOCK
------------------------------------------
Richard D. Murdock, President
