EXHIBIT 4.6
AEROGEN, INC.
AND
PATHOGENESIS CORPORATION
STOCK PURCHASE AGREEMENT
MARCH 13, 2000
TABLE OF CONTENTS
PAGE
1. PURCHASE OF SERIES E STOCK...............................................................................2
2. CLOSING DATE; DELIVERY...................................................................................2
2.1 Closing; Closing Date...........................................................................2
2.2 Delivery........................................................................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................3
3.1 Organization, Good Standing and Qualification...................................................3
3.2 Capitalization..................................................................................3
3.3 Subsidiaries....................................................................................4
3.4 Authorization...................................................................................4
3.5 Valid Issuance of Securities....................................................................4
3.6 Governmental Consents...........................................................................5
3.7 Litigation......................................................................................5
3.8 Employee Agreement..............................................................................5
3.9 Patents and Trademarks..........................................................................5
3.10 Compliance with Other Instruments...............................................................6
3.11 Agreements; Action..............................................................................6
3.12 Disclosure......................................................................................7
3.13 Rights of Registration and First Offer..........................................................7
3.14 Corporate Documents.............................................................................7
3.15 Title to Property and Assets....................................................................7
3.16 Financial Statements............................................................................8
3.17 Employee Benefit Plans; ERISA...................................................................8
3.18 Tax Returns and Payments........................................................................9
3.19 Insurance.......................................................................................9
3.20 Labor Agreements and Actions....................................................................9
3.21 Absence of Changes..............................................................................9
3.22 Brokers........................................................................................10
4. REPRESENTATIONS AND WARRANTIES OF PATHOGENESIS..........................................................10
4.1 Legal Power....................................................................................10
4.2 Due Execution..................................................................................10
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.3 Investment Representations.....................................................................10
4.4 Brokers........................................................................................11
5. CONDITIONS TO CLOSING...................................................................................12
5.1 Conditions to Obligations of PathoGenesis at Closing...........................................12
5.2 Conditions to Obligations of the Company at Closing............................................13
6. COVENANTS AND RIGHTS OF PATHOGENESIS...................................................................13
6.1 Sale Restriction...............................................................................13
6.2 Right of First Offer...........................................................................14
6.3 Standstill Agreement...........................................................................14
6.4 Registration...................................................................................15
7. COVENANTS OF THE COMPANY................................................................................15
7.1 Information Rights.............................................................................15
7.2 Press Releases.................................................................................16
8. MISCELLANEOUS...........................................................................................16
8.1 Governing Law..................................................................................16
8.2 Successors and Assigns.........................................................................16
8.3 Entire Agreement...............................................................................16
8.4 Severability...................................................................................16
8.5 Amendment and Waiver...........................................................................16
8.6 Notices........................................................................................16
8.7 Fees and Expenses..............................................................................17
8.8 Titles and Subtitles...........................................................................17
8.9 Counterparts...................................................................................17
ii.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made effective as of the 13th day of March, 2000,
by and between AEROGEN, INC., a Delaware corporation with its principal place
of business at 0000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (the
"Company"), and PATHOGENESIS CORPORATION, a Delaware corporation with its
principal place of business at 000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000 ("PathoGenesis"). AeroGen and PathoGenesis are sometimes
referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the Company and PathoGenesis have entered into that certain
Product Development and Supply Agreement of even date herewith (the
"Development Agreement", and together with this Agreement, the "Transactional
Agreements"); and
WHEREAS, in connection with the Development Agreement, the Company
desires to sell to PathoGenesis and PathoGenesis desires to purchase from the
Company an aggregate of 961,539 shares of Series E Convertible Preferred Stock
of the Company ("Series E Stock"), having the rights and preferences as set
forth in the Company's Amended and Restated Certificate of Incorporation
(attached as Exhibit A) (the "Restated Certificate"), for an aggregate price
of two million five hundred thousand one dollars and forty cents
($2,500,001.40) on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained herein, the parties hereto,
intending to be legally bound, do hereby agree as follows:
1. PURCHASE OF SERIES E STOCK. Subject to the terms and conditions of
this Agreement at the Closing (as hereinafter defined) the Company agrees to
sell to PathoGenesis and PathoGenesis agrees to purchase from the Company, for
a price of two million five hundred thousand one dollars and forty cents
($2,500,001.40), an aggregate of 961,539 shares of Series E Stock, free and
clear of all liens and encumbrances, at the purchase price per share of $2.60.
2. CLOSING DATE; DELIVERY.
2.1 CLOSING; CLOSING DATE. The closing of the sale and
purchase of shares of Series E Stock under Section 1.1 of this Agreement (the
"Closing") shall be held at 9:00 a.m. (Pacific Time) on the business day
following the satisfaction of the Closing Conditions specified in Section 5
below (the "Closing Date") at the offices of Cooley Godward LLP, 5 Palo Alto
Square, 4th Floor, Palo Alto, California, or at such other time and place as
the Company and PathoGenesis may agree.
2.2 DELIVERY. At the Closing, subject to the terms and
conditions hereof, the Company will deliver to PathoGenesis a stock
certificate, in the name of PathoGenesis, representing the shares of Series E
Stock deliverable at the Closing, dated as of the Closing, against payment of
the purchase price therefor by wire transfer, unless other means of payment
shall have been agreed upon by PathoGenesis and the Company.
1.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to PathoGenesis that,
except as set forth on a Schedule of Exceptions attached as Exhibit B (the
"Schedule of Exceptions"), specifically identifying the relevant subsection
hereof, which exceptions shall be deemed to be representations and warranties
as if made hereunder:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business or properties.
3.2 CAPITALIZATION. The authorized capital of the Company
immediately prior to the Closing will consist of:
(a) PREFERRED STOCK. 28,955,891 shares of Preferred
Stock (the "Preferred Stock"), of which 3,846,156 shares have been designated
Series A Preferred Stock, all of which are issued and outstanding immediately
prior to the Closing; of which 4,487,182 shares have been designated Series B
Preferred Stock, all of which are issued and outstanding immediately prior to
the Closing; of which 9,375,300 shares have been designated Series C Preferred
Stock, 9,245,300 of which are issued and outstanding immediately prior to the
Closing; of which 10,285,714 shares have been designated Series D Preferred
Stock, all of which are issued and outstanding immediately prior to the
Closing; and of which 961,539 shares have been designated Series E Preferred
Stock, none of which are issued and outstanding immediately prior to the
Closing. The rights, privileges and preferences of the Preferred Stock and
Common Stock are as stated in the Restated Certificate.
(b) COMMON STOCK. 50,000,000 shares of Common Stock
("Common Stock"), of which 6,928,821 shares are issued and outstanding
immediately prior to the Closing and 28,955,891 shares are reserved for
issuance upon conversion of Preferred Stock.
(c) Except for the conversion privileges of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock outstanding, the Stock to be issued under this
Agreement (and the conversion privileges thereof), outstanding options to
purchase 2,212,650 shares of Common Stock, warrants to purchase 32,051 shares
of Common Stock and warrants to purchase 65,000 shares of Series C Preferred
Stock, as of the Closing Date, (i) no person will have any right to subscribe
for or to purchase (including conversion or preemptive rights), or any options
for the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or other claims of any character
relating to, any capital stock or any stock or securities convertible into or
exchangeable for any capital stock of the Company; (ii) except as set forth in
this Section 3.2, the Company will not have any capital stock, equity
interests or other securities reserved for issuance for any purpose; and (iii)
the Company will not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or
any convertible securities, rights or options of the type described in the
preceding clause (i). No
2.
outstanding option, warrant or other security directly or indirectly
exercisable for or convertible into any class or series of the Company's
capital stock requires anti-dilution adjustment by reason of the transactions
contemplated by this Agreement. To the best knowledge of the Company, there
are no agreements among the Company's stockholders with respect to the voting
or transfer of the Company's capital stock, other than the agreements
regarding voting contained in the Amended and Restated Voting Agreement dated
August 25, 1998, (the "Voting Agreement") and the agreements regarding
transfer contained in the Co-Sale Agreement, dated August 25, 1998, (the
"Co-Sale Agreement"). Schedule 3.2(c) sets forth a complete and correct list
of the name of each of the Directors, Officers and five percent shareholders
of the Company and the amount of stock each owns in the Company. The Company
has reserved 5,800,000 shares of Common Stock under its 1994 and 1996 Stock
Option Plans, for issuance upon the exercise of options to be granted under
such stock plans. 2,696,029 shares of Common Stock remain in the employee
reserve pool.
3.3 SUBSIDIARIES. The Company does not currently own or
control, directly or indirectly, any interest in any other corporation,
association, or other business entity.
3.4 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of
all obligations of the Company under this Agreement and the authorization,
issuance and delivery of the Series E Stock (and the Common Stock issuable
upon conversion of the Stock) has been taken or will be taken prior to the
Closing, and this Agreement constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms.
3.5 VALID ISSUANCE OF SECURITIES.
(a) The Series E Stock that is being issued to
PathoGenesis hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, (i) will be duly and
validly issued, fully paid and nonassessable and (ii) will be free of any
pledges, liens, security interests, claims or encumbrances of any kind. Based
in part upon the representations of PathoGenesis in this Agreement, the Series
E Stock will be issued in compliance with all applicable federal and state
securities laws. The Common Stock issuable upon conversion of the Series E
Stock has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of the Restated Certificate (i) will be duly and
validly issued, fully paid and non-assessable, (ii) will be issued in
compliance with all applicable federal and state securities laws and (iii)
will be free of any pledges, security interests, claims or encumbrances of any
kind.
(b) The outstanding shares of Common Stock, Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock are all duly and validly authorized and issued, fully
paid and nonassessable, and were issued in compliance with all applicable
federal and state securities laws.
3.6 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the
3.
consummation of the transactions contemplated by this Agreement, except for
the filings pursuant to (i) Section 25102(f) of the California Corporate
Securities Law of 1968, as amended, and the rules thereunder, (ii) Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), and (iii) any other post-Closing filings with any other jurisdictions
required under applicable state securities laws, which filings will be timely
effected in accordance with such sections and/or rules.
3.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that
questions the validity of the Transaction Agreements or the right of the
Company to enter into them, or to consummate the transactions contemplated
thereby, or that might result, either individually or in the aggregate, in any
material adverse changes in the assets, condition or affairs of the Company,
financially or otherwise, or any change in the current equity ownership of the
Company, nor is the Company aware that there is any basis for the foregoing.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Company) involving the prior employment of any
of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of
their former employers, or their obligations under any agreements with prior
employers. The Company is not a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency
or instrumentality. There is no action, suit, proceeding or investigation by
the Company currently pending or which the Company intends to initiate.
3.8 EMPLOYEE AGREEMENT. Each employee and officer of the
Company and each consultant to the Company has executed an agreement with the
Company regarding confidentiality and proprietary information. The Company,
after reasonable investigation, is not aware that any of its employees are in
violation thereof, and the Company will use its best efforts to prevent any
such violation.
3.9 PATENTS AND TRADEMARKS. The Company has sufficient title
to and ownership of all patents, trademarks, service marks, trade names,
copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted and as proposed to be conducted
without any conflict with or infringement upon the rights of others. The
patents, patent applications, trademarks, service marks, trade names and
copyrights owned by the Company and that the Company has rights to use are set
forth on the Schedule of the Exceptions. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor is the
Company bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments
of any nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the use of
the employee's best efforts to promote the interests of the Company or that
would conflict with the Company's business as proposed to be conducted.
Neither the execution nor delivery of this Agreement, nor the carrying on of
the Company's business by the employees of the
4.
Company, nor the conduct of the Company's business as proposed, will, to the
Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe it is or will be necessary to utilize any inventions
of any of its employees (or people it currently intends to hire) made prior to
their employment by the Company.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS.
(a) The Company is not in violation or default of
any provisions of its Restated Certificate or Bylaws or of any instrument,
judgment, order, writ, decree or contract to which it is a party or by which
it is bound or of any material provision of any federal or state statute, rule
or regulation applicable to the Company. Without limiting the generality of
the foregoing, the Company is in compliance with all material federal, state
and local laws, rules and regulations relating to the development,
manufacture, safety, sale, labeling, marketing and, if required, governmental
approval of its products. The execution, delivery and performance of this
Agreement and the consummation of the transaction contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the, passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company.
(b) The Company has avoided every condition, and
has not performed any act, the occurrence of which would result in the
Company's loss of any right granted under any license, distribution or other
agreement.
3.11 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or
proposed transactions between the Company and any of its officers, directors,
affiliates, or any affiliate thereof.
(b) Except for the Transactional Agreements, there
are no agreements, understandings, instruments, contracts or proposed
transactions to which the Company is a party or by which it is bound that
involve (i) obligations of, or payments to the Company in excess of $50,000, or
(ii) the license of any patent, copyright, trade secret or other proprietary
right to or from the Company, or (iii) obligations of, or payments by, the
Company to any officer, director, employee or family member of any such
individual.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made distribution upon or with respect to any class
or series of its capital stock, (ii) incurred any indebtedness for money
borrowed or incurred any other liabilities individually in excess of $50,000 or
in excess of $100,000 in the aggregate, (iii) made any loans or advances to any
person, or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights, other than the sale of its inventory in the ordinary course of business.
(d) The Company is not a party to and is not bound
by any contract, agreement or instrument, or subject to any restriction under
its Restated Certificate or Xxxxxx,
0.
that adversely affects its business as now conducted or as proposed to be
conducted, its properties or its financial condition.
(e) The Company has not engaged in the past three
(3) months in any discussion (i) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership,
association or other business entity or any individual regarding the sale,
conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of the Company is disposed of, or
(iii) regarding any other form of liquidation, dissolution or winding up of
the Company.
(f) All contracts to which the Company is a party
or by which its assets may be bound are valid, binding and in full force and
effect, and no material breach or default, or event which, with notice or
lapse of time or both, would constitute any such material breach or default by
the Company (or, to the best knowledge of the Company, by any other party
thereto), exists with respect thereto. The Company has received no notice of
cancellation or non-renewal of any material contract.
3.12 DISCLOSURE. Except for certain agreements that the
Company considers to be confidential or proprietary in nature, agreements
which the Company is under an obligation not to disclose, and agreements that
the Company believes contain nonessential details of the interference
settlement, the Company has provided PathoGenesis or its counsel with all the
information which PathoGenesis has requested for deciding whether to acquire
the Series E Stock. No representation or warranty of the Company contained in
this Agreement and the Exhibits attached hereto, or, any other written
statement or certificate furnished or to be furnished to PathoGenesis in
connection herewith contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which
they were made. The Company has provided counsel to PathoGenesis access to
complete and accurate copies of each agreement, except for the agreements
stated above, to which the Company is a party or to which it, its assets or
its properties are subject.
3.13 RIGHTS OF REGISTRATION AND FIRST OFFER. Except for
registration rights granted to the holders of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock and
to be granted to PathoGenesis, in each case pursuant to the Third Amended and
Restated Information and Registration Rights Agreement dated August 25, 1998
(the "Registration Rights Agreement"), the Company has not granted or agreed
to grant any registration rights, including piggyback rights, to any person or
entity. All rights of first offer granted by the Company related to its
securities have been satisfied or will be waived prior to the Closing.
3.14 CORPORATE DOCUMENTS. The Restated Certificate and
By-laws of the Company are in the form provided to counsel to PathoGenesis.
3.15 TITLE TO PROPERTY AND ASSETS. The Company owns its
property and assets free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and
6.
liens which arise in the ordinary course of business and do not materially
impair the Company`s ownership or use of such property or assets. With respect
to the property and assets it leases, the Company is in compliance with such
leases and, to the best of its knowledge, holds a valid leasehold interest
free of any liens, claims or encumbrances.
3.16 FINANCIAL STATEMENTS. The Company has delivered to
PathoGenesis its audited financial statements (balance sheet, profit and loss
statement, cash flows statement and statement of stockholder equity) for the
year ended December 31, 1998 and its unaudited financial statements (balance
sheet, profit and loss statement, cash flows statement and statement of
stockholder equity) for the twelve months ended December 31, 1999
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in accordance with generally accepted accounting principles and on a
consistent basis throughout the periods indicated and with each other. The
Financial Statements fairly present the financial condition and operating
results of the Company as of the dates, and for the periods, indicated
therein, subject, in the case of the unaudited financial statements, to normal
year-end audit adjustments, which are neither individually nor in the
aggregate material. Except as set forth in the Financial Statements, the
Company has no material liabilities, contingent or otherwise.
3.17 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Item 3.17 of the Schedule of Exceptions contains
a true and complete list of all "employee benefit plans," within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any other bonus, profit sharing, compensation, severance,
deferred compensation, fringe benefit, insurance, welfare, medical,
post-retirement health or welfare benefit, life, stock option, stock purchase,
disability, termination, retention or other plan, agreement, trust fund or
arrangement (whether written or unwritten), maintained, sponsored or contributed
to by the Company or any entity that would be deemed a "single employer" with
the Company under Section 414(b), (c), (m) or (o) of the Internal Revenue Code
of 1986, as amended (the "Code") or Section 4001 of ERISA (an "ERISA Affiliate")
on behalf of any employee of the Company or any ERISA Affiliate (whether
current, former or retired) or their beneficiaries or with respect to which the
Company or any ERISA Affiliate has or has had any obligation on behalf of any
such employee or beneficiary (each a "Plan" and, collectively, the "Plans").
(b) None of the ERISA Affiliates or the Company has
ever contributed to or contributes to, been required to contribute to, or
otherwise participated in or participates in (i) any "multiemployer plan"
(within the meaning of Section 4001(a)(3) of ERISA or Section 414(f) of the
Code), (ii) any single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) which is subject to Sections 4063 and 4064 of ERISA or
(iii) any plan subject to Title IV of ERISA or Section 412 of the Code.
(c) The Company, each ERISA Affiliate, each Plan
and each "plan sponsor" (within the meaning of Section 3(16) of ERISA) and
each "employee benefit plan" (within the of section 3(3) of ERISA) has
complied in all material respects with applicable law including, without
limitation, the Code and ERISA and each Plan complies with and has been
maintained and operated in all material respects in accordance with its terms.
7.
(d) With respect to each of the Plans referenced in
item 3.17 of the Schedule of Exceptions: (i) all payments required by any Plan
or by law with respect to all periods through the date of the Closing have
been made prior to the Closing; (ii) no "prohibited transaction," within the
meaning of Section 4975 of the Code and Section 406 of ERISA, has occurred, or
to the best of the Company's knowledge is expected to occur, with respect to
any Plan which has subjected or could subject the Company, any officer,
director or employee thereof or any trustee, administrator or other fiduciary,
to a tax or penalty on prohibited transactions imposed by either Section 502
of ERISA or Section 4975 of the Code, or any other liability with respect
thereto; and (iii) no Plan is under audit or investigation by the Internal
Revenue Service or the Department of Labor or any other governmental authority
and no such completed audit, if any, has resulted in the imposition of any tax
or penalty.
3.18 TAX RETURNS AND PAYMENTS. The Company has filed all tax
returns and reports as required by law. These returns and reports are true and
correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith which are listed
in the Schedule of Exceptions. The provision for taxes of the Company as shown
in the Financial Statements is adequate for taxes due or accrued as of the
date thereof. The Company has not elected pursuant to the Internal Revenue
Code of 1986, as amended (the "Code"), to be treated as a Subchapter S
corporation or a collapsible corporation pursuant to Section 1362(a) or
Section 341(f) of the Code, nor has it made any other elections pursuant to
the Code (other than elections which relate solely to methods of accounting,
depreciation or amortization) which would have a material adverse effect on
the Company, its financial condition, its business as currently conducted or
as proposed to be conducted or any of its properties or material assets.
3.19 INSURANCE. The Company has in full force and effect
fire and casualty insurance policies, with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace any of its
properties that might be damaged or destroyed. The Company also has in full
force and effect product liability insurance and comprehensive general
liability insurance in amounts and with such coverages as are generally
maintained by responsible companies in the same industry.
3.20 LABOR AGREEMENTS AND ACTIONS. The Company is not bound
by or subject to (and none of its assets or properties is bound by or subject
to) any written or oral, express or implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or, to the
knowledge of the Company, has sought to represent any of the employees,
representatives or agents of the Company. There is no strike or other labor
dispute involving the Company pending, or to the knowledge of the Company
threatened, which could have a material adverse effect on the assets,
properties, financial condition, operating results, prospects or business of
the Company (as such business is currently conducted and as it is proposed to
be conducted), nor is the Company aware of any labor organization activity
involving its employees. The Company is not aware that any officer or key
employee, or that any group of key employees, intends to terminate their
employment, with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. The employment of each
officer and employee of the Company is terminable at the will of the Company.
8.
3.21 ABSENCE OF CHANGES. Except as specifically set forth in
this Agreement, since December 31, 1999, (a) the Company has not entered into
any transaction other than in the ordinary course of business and which is
not, individually or in the aggregate, material to the assets, properties,
financial condition, operating results or business of the Company (as such
business is currently conducted and as it is proposed to be conducted), (b)
the Company has not changed any compensation arrangement or agreement with any
of its key employees or executive officers, or changed the rate of pay of its
employees as a group, (c) the Company has not changed or amended any contract
by which the Company or any of its respective assets are bound or subject
which would have a material adverse effect on the business of the Company, (d)
there has been no waiver by the Company of a valuable right or of a debt owing
to the Company which would have a material and adverse effect on the business
of the Company, (e) there has not been any satisfaction or discharge of any
lien, claim or encumbrance or any payment of any obligation by the Company
except in the ordinary course of business and which is not, individually or in
the aggregate, material to the assets, properties, financial condition,
operating results or business of the Company (as such business is currently
conducted and as it is proposed to be conducted), and (f) except as set forth
in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than obligations under contracts and
commitments incurred in the ordinary course of business not in excess of
$50,000 individually and $100,000 in the aggregate.
3.22 BROKERS. The Company has retained no finder, broker,
agent, financial adviser or other intermediary in connection with the
transactions contemplated by this Agreement and the Company agrees to
indemnify and hold harmless PathoGenesis from liability for any compensation
to any such intermediary and the fees and expenses of defending against such
liability or alleged liability.
4. REPRESENTATIONS AND WARRANTIES OF PATHOGENESIS.
PathoGenesis hereby represents and warrants to the Company as follows:
4.1 LEGAL POWER. PathoGenesis has the requisite corporate
power to enter into this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
4.2 DUE EXECUTION. This Agreement has been duly authorized,
executed and delivered by PathoGenesis, and, upon due execution and delivery
by the Company, this Agreement will be a valid and binding agreement of
PathoGenesis, enforceable against Pathogenesis in accordance with its terms.
4.3 INVESTMENT REPRESENTATIONS. In connection with any sale
of shares under this Agreement, PathoGenesis makes the following
representations:
(a) PathoGenesis is acquiring the shares of Series
E Stock under this Agreement for its own account, not as nominee or agent, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").
9.
(b) PathoGenesis understands that (i) the shares of
Series E Stock to be purchased under this Agreement have not been registered
under the Securities Act by reason of a specific exemption therefrom, that
such securities must be held by PathoGenesis, and that PathoGenesis must,
therefore, bear the economic risk of such investment, until a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration; (ii) each certificate representing such shares will be
endorsed with the following legends:
A. THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
B. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS, INCLUDING RESTRICTIONS ON
TRANSFERABILITY, OF THAT CERTAIN STOCK PURCHASE AGREEMENT, DATED MARCH 1,
2000. A COPY OF SUCH STOCK PURCHASE AGREEMENT WILL BE FURNISHED TO THE RECORD
HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO AEROGEN,
INC. AT ITS PRINCIPAL PLACE OF BUSINESS."
C. Any legend required to be placed thereon by
the Company's Bylaws (and shown on Exhibit B hereto or as may hereafter be
added to such Bylaws with respect to all Series E Stock of the Company) or
under applicable state securities laws.
and (iii) the Company will instruct any transfer agent not to register the
transfer of the shares of Series E Stock purchased pursuant to this Agreement
(or any portion thereof) unless the conditions specified in the foregoing
legends are satisfied, until such time as a transfer is made, pursuant to the
terms of this Agreement, and in compliance with Rule 144 or pursuant to a
registration statement or, if the opinion of counsel referred to above is to
the further effect that such legend is not required in order to establish
compliance with any provisions of the Securities Act or this Agreement.
(c) PathoGenesis has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits
and risks of the investment in the shares of Series E Stock purchased
hereunder.
(d) PathoGenesis is an "accredited investor" as
such term is defined in Rule 501(a) of Regulation D of the General Rules and
Regulations prescribed by the Securities and Exchange Commission pursuant to
the Securities Act.
10.
4.4 BROKERS. PathoGenesis has retained no finder, broker,
agent, financial advisor or other intermediary in connection with the
transactions contemplated by this Agreement and PathoGenesis agrees to
indemnify and hold harmless the Company from liability for any compensation to
any such intermediary and the fees and expenses of defending against such
liability or alleged liability.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO OBLIGATIONS OF PATHOGENESIS AT CLOSING.
PathoGenesis' obligation to purchase the shares of the Company's Series E
Stock at the Closing is subject to the fulfillment to PathoGenesis'
satisfaction, on or prior to the Closing, of all of the following conditions,
any of which may be waived by PathoGenesis:
(a) REPRESENTATIONS AND WARRANTIES TRUE;
PERFORMANCE OF OBLIGATIONS. The representations and warranties made by the
Company in Section 3 hereof shall be true and correct in all material respects
and the Company shall have performed and complied with all obligations and
conditions herein required to be performed or complied with by it on or prior
to the Closing, and a Certificate duly executed by an officer of the Company,
to the effect of the foregoing, shall be delivered to PathoGenesis.
(b) PROCEEDINGS AND DOCUMENTS. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to counsel to PathoGenesis,
and counsel to PathoGenesis shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All
authorizations, approvals, or permits, if any, of any governmental authority
or regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the shares to be issued
pursuant to this Agreement shall have been duly obtained and shall be
effective on and as of the Closing. No stop order or other order enjoining the
sale of the shares to be sold at such Closing shall have been issued and no
proceedings for such purpose shall be pending or, to the best knowledge of the
Company, threatened by the Securities and Exchange Commission, or any
commissioner of corporations or similar officer of any state having
jurisdiction over this transaction. At the time of the Closing, the sale and
issuance of the shares of Series E Stock to be sold thereat shall be legally
permitted by all laws and regulations to which PathoGenesis and the Company
are subject.
(d) NO PENDING LITIGATION. There shall not be any
proceeding, hearing action, suit, arbitration or any investigation pending or
threatened or any legal requirement (including any federal, state, local,
municipal, foreign, international law, statute, rule or regulation) in effect
that would prevent the consummation of any of the transactions contemplated by
this Agreement.
11.
(e) OPINION OF COMPANY COUNSEL. PathoGenesis shall
have received from Xxxxxx Godward LLP, counsel for the Company, an opinion,
dated as of the Closing, in the form attached hereto as Exhibit C.
(f) NECESSARY CONSENTS. The Company shall have
obtained, and shown by written evidence satisfactory to PathoGenesis, all
required consents and approvals of third parties necessary to convey to
PathoGenesis all of the shares of Series E Preferred Stock and to consummate
the other transactions contemplated by this Agreement.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AT CLOSING. The
Company's obligation to issue and sell the shares of its Series E Stock at the
Closing is subject to the fulfillment to the Company's satisfaction, on or
prior to the Closing, of the following conditions, any of which may be waived
by the Company:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties made by PathoGenesis in Section 4 hereof shall
be true and correct in all material respects at the date of the Closing.
(b) PERFORMANCE OF OBLIGATIONS. PathoGenesis shall
have performed and complied with all agreements and conditions herein required
to be performed or complied with by it on or before the Closing, and a
Certificate duly executed by an officer of PathoGenesis, to the effect of the
foregoing, shall be delivered to the Company.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All
authorizations, approvals, or permits, if any, of any governmental authority
or regulatory body of the United States or of any state that are required in
connection with the lawful sale and issuance of the shares of Series E Stock
to be sold and issued pursuant to this Agreement shall have been duly obtained
and shall be effective on and as of the Closing. No stop order or other order
enjoining the sale of such shares shall have been issued and no proceedings
for such purpose shall be pending or, to the best knowledge of the Company,
threatened by the Securities and Exchange Commission, or any commissioner of
corporations or similar officer of any state having jurisdiction over this
transaction. At the time of the Closing, the sale and issuance of the shares
of Series E Stock to be sold and issued at the Closing shall be legally
permitted by all laws and regulations to which PathoGenesis and the Company
are subject.
(d) NO PENDING LITIGATION. There shall not be any
proceeding, hearing, action, suit, arbitration or any investigation pending or
threatened or any legal requirement (including any federal, state, local,
municipal, foreign, international law, statute, rule or regulation) in effect
that would prevent the consummation of any of the transactions contemplated by
this Agreement.
6. COVENANTS AND RIGHTS OF PATHOGENESIS.
6.1 SALE RESTRICTION. PathoGenesis hereby covenants and
agrees that it will not contract to sell, or otherwise transfer, loan, pledge
or grant any rights with respect to any shares of the Company's Series E Stock
acquired pursuant to this Agreement, or Common Stock issued on conversion
thereof (or purchase or sell any derivative security that has a similar effect
or enter into any contract that has a similar effect), without the prior
written consent of the
12.
Company until the earlier of (a) one year following the Closing of the initial
public offering of securities of the Company pursuant to an underwritten
registration under the Securities Act, as amended (the "IPO"), or (b) four
years after the date of this Agreement. Notwithstanding anything in this
Section 6.1 to the contrary, if the Company sells its equity securities to
another corporate partner (defined as a corporation which is purchasing equity
securities of the Company in connection with entering into a commercial
relationship with the Company) and such corporate partner does not agree to a
restriction on the sale of equity securities of the Company for at least one
year following the Company's IPO, then subsection (a) above shall be modified
to provide that PathoGenesis' sale restriction shall extend only for that
length of time following an IPO as the sale restriction of such corporate
partner. Following the expiration of the sale restriction set forth in this
Section 6.1, PathoGenesis agrees that it will give the Company at least five
(5) business days' advance notice of its intention to sell the Company's
equity securities, and will use commercially reasonable efforts to cooperate
with the Company and its designated market makers to find a buyer or buyers
for the Company's stock and conclude its sale of such stock in an orderly
manner.
6.2 RIGHT OF FIRST OFFER.
(a) Prior to the Company's IPO, PathoGenesis shall
not transfer any shares of the Company's Series E Stock (or Common Stock
issued on conversion thereof) purchased pursuant to this Agreement, whether or
not for consideration, to a third party, without complying with the provisions
of this Section 6.2. The right of first offer herein shall be freely
assignable by the Company.
(b) Prior to the Company's IPO, in the event
PathoGenesis desires to transfer any shares of the Company then held by it,
PathoGenesis shall give written notice to the Secretary of the Company of its
intention to transfer the shares (the "Company Notice"). The Company Notice
must name the number of Shares of Series E Stock (or Common Stock issued on
conversion thereof) involved in the proposed transfer, the proposed purchase
price per share, and any other terms and conditions of the proposed transfer.
Within fifteen (15) days after delivery of the Company Notice, the Company
shall have the right to elect to purchase all (but not less than all) of the
shares proposed to be transferred (the "Option Shares") on substantially the
same terms and conditions specified in the Company Notice, by delivery to
PathoGenesis of a written notice.
(c) In the event that the Company fails to exercise
the right to purchase set forth in foregoing paragraph (b) as to all the
Option Shares within the period specified above, PathoGenesis shall have sixty
(60) days thereafter to sell the Option Shares at a price and upon terms no
more favorable to the purchaser thereof than specified in the Company Notice.
In the event that PathoGenesis has not sold such shares within such sixty (60)
day period, PathoGenesis shall not thereafter sell any of such shares without
first offering such shares to the Company in the manner provided above.
6.3 STANDSTILL AGREEMENT. Other than shares of Series E
Stock, which it is purchasing pursuant to this Agreement, and the Common Stock
issued upon conversion thereof, PathoGenesis hereby covenants and agrees that
it will not, nor will it permit any of its parents, subsidiaries or other
related entities to, purchase or otherwise acquire, directly or indirectly,
any
13.
equity securities of the Company (or rights or options to purchase such
securities) without the prior written approval of the Company. This provision
shall terminate and be of no further force or effect five years from the date
hereof or such earlier date as shall be agreed to by the Company; provided,
that the undertaking of this Section 6.3 shall automatically terminate upon
the occurrence of any of the following events: (a) the filing with the SEC of
a Schedule 13D by any person or entity indicating that a person or entity has
acquired (x) more than 20% of any class of the Company's voting equity
securities, or (y) has acquired at least 5% of any class of the Company's
voting equity securities which Schedule 13D expresses the filing party's
intention to assume control of the Company, whether by tender offer, merger,
proxy contest or otherwise; (b) the commencement of a tender offer by any
person or entity to acquire 20% or more of the Company's outstanding voting
equity securities; or (c) the solicitation of proxies by any party other than
the Company to which Rule 14a-11 of the rules and regulations under the
Securities and Exchange Act of 1934, as amended, applies and is intended to
effect a change in the majority of members of the Company's Board of Directors.
6.4 REGISTRATION. PathoGenesis shall become a party to, and
shall be deemed a "Holder" under, the Registration Rights Agreement for all
purposes except Section 2 and Section 16 thereof.
7. COVENANTS OF THE COMPANY
7.1 INFORMATION RIGHTS. Until the closing of an IPO by the
Company, the Company covenants and agrees that for so long as PathoGenesis
owns, beneficially or of record, at least 500,000 shares of the Company's
Series E Stock (or Common Stock issued on conversion thereof) (in each case as
adjusted for stock splits or combinations, stock dividends or similar events),
the Company shall furnish to PathoGenesis the following reports:
(a) ANNUAL REPORTS. As soon as available and in any
event within 90 days after the end of each fiscal year, consolidated and
consolidating financial statements of the Company including a balance sheet as
of the end of such fiscal year and statements of income and retained earnings
and of sources and applications of funds for such fiscal year, prepared in
reasonable detail and in accordance with generally accepted accounting
principles consistently applied and accompanied by the opinion thereon of a
recognized firm of independent certified public accountants as may be selected
by the Board of Directors of the Company.
(b) INTERIM REPORTS. As soon as available, and in
any event within 45 days after the end of each of the first three quarters of
each of the Company's fiscal years beginning with the quarter ending March 31,
2000, consolidated and consolidating financial statements of the Company
including a cash flow statement, a balance sheet as of the end of such
accounting period and statements of income and retained earnings and of
sources and applications of funds for such accounting period and for the
period from the beginning of such fiscal year to the end of such accounting
period, and setting forth in comparative form the figures for the
corresponding periods of the preceding fiscal year, prepared in reasonable
detail and in accordance with generally accepted accounting principles
consistently applied and certified as correct by the chief executive officer
and chief financial officer of the Company.
14.
7.2 PRESS RELEASES. Except as provided by law, each party
will secure advanced written approval from the other party of the decision to
issue and the content of any statement regarding or mentioning the
transactions contemplated hereby, whether in writing or otherwise to the
public or press. This provision shall not be deemed to have been breached if
the disclosing party acting on the advice of its securities or other
regulatory counsel makes disclosures to investors and potential investors or
to any governmental or other regulatory agency or organization.
8. MISCELLANEOUS.
8.1 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the substantive laws of Delaware and the United
States of America, without regard to choice of law rules.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, and permitted assigns of the parties hereto.
8.3 ENTIRE AGREEMENT. This Agreement, the Development
Agreement and the Exhibits hereto and thereto, and the other documents
delivered pursuant hereto, constitutes the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof and
no party shall be liable or bound to any other party in any manner by any
representations, warranties, covenants, or agreements except as specifically
set forth herein or therein. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto and their
respective successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
8.4 SEVERABILITY. Whenever possible, each provision of the
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of the Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of the Agreement in the event of such invalidity,
the parties shall seek to agree on an alternative enforceable provision that
preserves the original purpose of this Agreement.
8.5 AMENDMENT AND WAIVER. Except as otherwise provided
herein, any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely), with the written consent of the Company and
PathoGenesis. Any amendment or waiver effected in accordance with this Section
shall be binding upon any holder of any securities purchased under this
Agreement (including securities into which such securities have been
convened), each future holder of all such securities, and the Company.
8.6 NOTICES. All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed effectively
given and received (a) upon
15.
personal delivery, (b) on the fifth day following mailing by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
Company and PathoGenesis at their respective addresses first above written,
(c) upon transmission of telegram or facsimile (with telephonic notice), or
(d) upon confirmed delivery by overnight commercial courier service.
8.7 FEES AND EXPENSES. The Company and PathoGenesis shall
bear their own expenses and legal fees incurred on their behalf with respect
to this Agreement and the transactions contemplated hereby.
8.8 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one instrument.
16.
IN WITNESS WHEREOF, the foregoing Stock Purchase Agreement is hereby
executed as of the date first above written.
AEROGEN, INC.
By:/s/ Xxxx X. Xxxx
---------------------------------
Xx. Xxxx X. Xxxx
Chairman and Chief Executive Officer
PATHOGENESIS CORPORATION
By:/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive Officer
17.
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF AEROGEN, INC.
AeroGen, Inc., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
ONE: The name of the corporation is AeroGen, Inc.
TWO: The original Certificate of Incorporation of the corporation was
filed with the Secretary of State of the State of Delaware on March 12, 1998
under the name AeroGen (Delaware), Inc.
THREE: The Certificate of Incorporation of said corporation shall be
amended and restated to read in full as follows:
ARTICLE 1
The name of this corporation is AEROGEN, INC.
ARTICLE 2
The address of the registered office of the corporation in the State of
Delaware is 0000 Xxxxxx Xxxxxx, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE 3
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 the State of Delaware.
ARTICLE 4
The total number of shares of stock and the classes of stock which the
corporation shall have authority to issue is as follows:
A. CLASSES OF STOCK. This corporation is authorized to issue
two classes of stock to be designated "Common Stock" and "Preferred Stock." The
total number of shares which this corporation is authorized to issue is
Seventy-Eight Million Nine Hundred Fifty-Five Thousand Eight Hundred Ninety-One
(78,955, 891) shares, of which Fifty Million (50,000,000) shares of the par
value of One-Tenth of One Cent ($.001) shall be Common Stock and Twenty-Eight
Million Nine Hundred Fifty-Five Thousand Eight Hundred Ninety-One (28,955,891)
shares of the par value of One-Tenth of One Cent ($.001) shall be Preferred
Stock. The Preferred Stock authorized by this Certificate of Incorporation shall
be issued by series as set forth hereto. The first series of Preferred Stock
shall be designated "Series A Preferred Stock" and shall consist of Three
Million Eight Hundred Forty-Six Thousand One Hundred Fifty-Six (3,846,156)
shares. The second series of Preferred Stock shall be designated "Series B
Preferred
18.
Stock" and shall consist of Four Million Four Hundred Eighty-Seven Thousand One
Hundred Eighty-Two (4,487,182) shares. The third series of Preferred Stock shall
be designated "Series C Preferred Stock" and shall consist of Nine Million Three
Hundred Seventy-Five Thousand Three Hundred (9,375,300) shares. The fourth
series of Preferred Stock shall be designated "Series D Preferred Stock" and
shall consist of Ten Million Two Hundred Eighty-Five Thousand Seven Hundred
Fourteen (10,285,714) shares. The fifth series of Preferred Stock shall be
designated "Series E Preferred Stock" and shall consist of Nine Hundred
Sixty-One Thousand Five Hundred Thirty-Nine (961,539) shares.
X. XXXXXX, PREFERENCES AND RIGHTS, AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF PREFERRED STOCK. The Preferred Stock authorized
by this Certificate of Incorporation may be issued from time to time in series.
The powers, preferences and rights, and the qualifications, limitations and
restrictions granted to and imposed on the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock are as set forth below in this Division B of Article IV. The
Board of Directors is hereby authorized to fix or alter the powers, preferences
and rights, and the qualifications, limitations and restrictions granted to or
imposed upon additional series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or of any of them.
Subject to compliance with applicable protective voting rights which have been
or may be granted to the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, or
other series of Preferred Stock in certificate(s) of determination or this
Certificate of Incorporation, as amended from time to time ("Protective
Provisions"), but notwithstanding any other right of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock or any other series of Preferred Stock, the
powers, preferences and rights of and the qualifications, limitations and
restrictions on, any such additional series may be subordinated to, pari passu
with (including, without limitation, inclusion in provisions with respect to
liquidation and acquisition preferences and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class or
series of Preferred or Common Stock. Subject to compliance with applicable
Protective Provisions, the Board of Directors is also authorized to increase or
decrease the number of shares of any series (other than the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock), prior or subsequent to the issue of any
shares of that series, but not below the number of shares of such series then
outstanding, in case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
1. DIVIDEND RIGHTS.
The holders of the Preferred Stock shall be entitled to receive, out of
any funds legally available therefor, dividends on each outstanding share of
Preferred Stock payable in preference and priority to any payment of any
dividend on any shares of Common Stock of the corporation at an annual rate of
$.0312 per share of Series A Preferred Stock, $.0624 per share of Series B
Preferred Stock, $.08 per share of Series C Preferred Stock, $.14 per share of
Series D Preferred Stock, and $.208 per share of Series E Preferred Stock, when
and as declared by the Board of Directors. Dividends on the shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock shall be paid ratably to
19.
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock, based on
the number of shares held. The right to such dividends on the Preferred Stock
shall be noncumulative. No right shall accrue to holders of shares of Preferred
Stock by reason of the fact that dividends on said shares are not declared in
any prior year, nor shall any undeclared or unpaid dividend bear or accrue any
interest. Dividends, if paid, or if declared and set apart for payment, must be
paid or declared and set apart for payment on all outstanding Preferred Stock
contemporaneously. Dividends shall be paid in cash. No shares of Common Stock
shall receive any dividend at a rate which is greater than the rate at which
dividends are simultaneously paid in respect of the Preferred Stock (based on
the number of shares of Common Stock into which the Preferred Stock is
convertible on the date of dividend).
Dividends shall be paid by forwarding a check, postage prepaid, to the
address of each holder (or, in the case of joint holders, to the address of any
such holder) of Preferred Stock as shown on the books of the corporation, or to
such other address as such holder specifies for such purpose by written notice
to the corporation. The forwarding of such check shall satisfy all obligations
of the corporation with respect to such dividends, unless such check is not paid
upon timely presentation.
2. LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the
corporation, whether voluntary or not, each holder of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, and Series E Preferred Stock shall be entitled to receive, before any
amount shall be paid to holders of Common Stock, an amount per share equal to
$0.39, $0.78, $1.00, $1.75, and $2.60, respectively (each, as adjusted for
stock splits, combinations or similar events and hereafter referred to as the
"Original Issue Price" of such series) plus all declared and unpaid
dividends, if any. If upon the occurrence of a liquidation, dissolution or
winding up, the assets and surplus funds distributed among the holders of
Preferred Stock shall be insufficient to permit the payment to such holders
of the full preferential amount, then the entire assets and surplus funds of
the corporation legally available for distribution shall be distributed
ratably among the holders of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock, in proportion to the aggregate amount payable to each of
such holders pursuant to the immediately preceding sentence. If upon the
occurrence of a liquidation, dissolution or winding up, after the payment to
the holders of Preferred Stock of the preferential amount, assets or surplus
funds remain in the corporation, the holders of Preferred Stock and Common
Stock shall be entitled to receive all such remaining assets and surplus
funds pro rata on an as-if-converted basis.
No later than 20 days before any event that, pursuant to Section 5(a),
permits a holder of Preferred Stock to have each share of Preferred Stock held
by such holder treated for all purposes as if it had been converted into Common
Stock (for purposes of this Section 2, a "Merger or Sale of Corporation"), the
corporation shall deliver a notice to each holder of Preferred Stock setting
forth the principal terms of such Merger or Sale of Corporation. Such notice
shall be deemed delivered upon personal delivery or five days after deposit in
the United States mail, by registered or certified mail, addressed to a party at
its address as shown on the stock records of
20.
the corporation. Such notice shall include a description of the amounts that
would be paid to holders of Preferred Stock under this Section 2 and of the
consideration that such holders would receive if they exercised their rights
under Section 5(a) to have shares of Preferred Stock treated as if they had been
converted into Common Stock. No later than ten days after delivery of the
notice, each holder of Preferred Stock may deliver an election to the
corporation notifying the corporation that the holder desires that such holder's
shares of Preferred Stock be treated, pursuant to Section 5, as if they had been
converted into shares of Common Stock and, if no such notice is delivered, such
holder shall receive such amounts as are provided for under this Section 2 as
any Merger or Sale of Corporation shall be deemed a liquidation, dissolution or
winding up of the corporation for the purposes of this Section 2.
3. VOTING RIGHTS.
(a) VOTE OTHER THAN FOR DIRECTORS. Except as otherwise required by law,
the holders of Preferred Stock and the holders of Common Stock shall be entitled
to notice of any stockholders' meeting and to vote upon any matter submitted to
the stockholders for a vote, other than the election of directors, as follows:
(i) the holders of Preferred Stock shall have one vote for each full share of
Common Stock into which their respective shares of Preferred Stock are
convertible on the record date for the vote and (ii) the holders of Common Stock
shall have one vote per share of Common Stock.
(b) VOTING FOR DIRECTORS.
(i) The holders of shares of Preferred Stock voting as a class
shall be entitled to elect two (2) directors. The holders of shares of Common
Stock voting as a class shall be entitled to elect two (2) directors. The
holders of shares of Series D Preferred Stock voting as a class shall be
entitled to elect one (1) director. The remaining director or directors shall be
elected by the affirmative vote of the holders of the Preferred Stock and of the
holders the Common Stock, voting together as a class with the holders of
Preferred Stock having one vote for each full share of Common Stock into which
their respective shares of Preferred Stock are convertible on the record date
for the vote. If no shares of Preferred Stock remain outstanding, then the
directors otherwise elected by the Preferred Stock as provided above in this
Section 3(b), shall be elected by the holders of Common Stock. In the case of
any vacancy in the office of a director elected by a specified group of
stockholders, a successor shall be elected to hold office for the unexpired term
of such director by the affirmative vote of a majority of the shares of such
specified group given at a special meeting of such stockholders duly called or
by an action by written consent for that purpose. Any director who shall have
been elected by a specified group of stockholders may be removed during the
aforesaid term of office, either for or without cause by, and only by, the
affirmative vote of the holders of a majority of the shares of such specified
group, given at a special meeting of such stockholders duly called or by an
action by written consent for that purpose, and any such vacancy thereby created
may be filled by the vote of the holders of a majority of the shares of such
specified group represented at such meeting or in such consent.
(ii) No person entitled to vote at an election for directors
may cumulate votes to which such person is entitled, unless, at the time of such
election, the corporation is subject to Section 2115(b) of the California
General Corporation Law (" CGCL"). During such time or
21.
times that the corporation is subject to Section 2115(b) of the CGCL, every
stockholder entitled to vote at an election for directors may cumulate such
stockholder's votes and give one candidate a number of votes equal to the number
of directors to be elected multiplied by the number of votes to which such
stockholder's shares are otherwise entitled, or distribute the stockholder's
votes on the same principle among as many candidates as such stockholder thinks
fit. No stockholder, however, shall be entitled to so cumulate such
stockholder's votes unless (a) the names of such candidate or candidates have
been placed in nomination prior to the voting and (b) the stockholder has given
notice at the meeting, prior to the voting, of such stockholder's intention to
cumulate such stockholder's votes. If any stockholder has given proper notice to
cumulate votes, all stockholders may cumulate their votes for any candidates who
have been properly placed in nomination. Under cumulative voting, the candidates
receiving the highest number of votes, up to the number of directors to be
elected, are elected.
4. CERTAIN TAXES.
The corporation shall pay any and all issuance and other taxes
(excluding any federal or state income taxes) that may be payable in respect of
any issuance or delivery of shares of Common Stock on conversion of Preferred
Stock. The corporation shall not, however, be required to pay any tax that may
be payable in respect of any transfer involved in the issuance and delivery of
shares of Common Stock in a name other than that in which the shares of
Preferred Stock to which such issuance relates were registered, and no such
issuance or delivery shall be made unless and until the person requesting such
issuance has paid to the corporation the amount of any such tax, or it is
established to the satisfaction of the corporation that such tax has been paid.
5. CONVERSION TO COMMON STOCK.
The Preferred Stock shall be convertible into Common Stock of the
corporation as follows:
(a) DEFINITIONS. For purposes of this Section 5 the following
definitions shall apply:
(i) "COMMON STOCK EQUIVALENTS" shall mean Convertible
Securities and rights entitling the holder thereof to receive directly, or
indirectly, additional shares of Common Stock without the payment of any
consideration by such holder for such additional shares of Common Stock or
Common Stock Equivalents.
(ii) "COMMON STOCK OUTSTANDING" shall mean the aggregate of
all Common Stock outstanding and all Common Stock issuable upon exercise of all
outstanding Options and conversion of all outstanding Convertible Securities.
(iii) "CONVERSION PRICE" with respect to a series of Preferred
Stock, shall mean the price, determined pursuant to this Section 5, at which
shares of Common Stock shall be deliverable upon conversion of such series of
Preferred Stock.
(iv) "CONVERTIBLE SECURITIES" shall mean any indebtedness or
shares of stock or other securities convertible into or exchangeable for Common
Stock, including without limitation Preferred Stock.
22.
(v) "CURRENT CONVERSION PRICE" with respect to a series of
Preferred Stock, shall mean the Conversion Price immediately before the
occurrence of any event, which, pursuant to Section 5(c), causes an adjustment
to the Conversion Price of such series of Preferred Stock.
(vi) "ISSUANCE DATE" shall mean the first date on which this
Amended and Restated Certificate of incorporation is filed with the Secretary of
State of the State of Delaware.
(vii) "OPTIONS" shall mean any rights, warrants or options to
subscribe for or purchase or otherwise acquire Common Stock or Convertible
Securities.
(b) RIGHT TO CONVERT; INITIAL CONVERSION PRICE. Each holder of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock may, at any time, convert
any or all shares of such Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock,
as the case may be, into fully-paid and non-assessable shares of Common Stock at
the Conversion Price for such series of Preferred Stock. Each share of Series A
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion for Series A Preferred Stock into $0.39 for each share of Series A
Preferred Stock being converted; the Conversion Price of the Series A Preferred
Stock shall initially be $0.39 per share of Common Stock. Each share of Series B
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion for Series B Preferred Stock into $0.78 for each share of Series B
Preferred Stock being converted; the Conversion Price of the Series B Preferred
Stock shall initially be $0.78 per share of Common Stock. Each share of Series C
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion for Series C Preferred Stock into $1.00 for each share of Series C
Preferred Stock being converted; the Conversion Price of the Series C Preferred
Stock shall initially be $1.00 per share of Common Stock. Each share of Series D
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion for Series D Preferred Stock into $1.75 for each share of Series D
Preferred Stock being converted; the Conversion Price of the Series D Preferred
Stock shall initially be $1.75 per share of Common Stock. Each share of Series E
Preferred Stock shall be convertible into the number of shares of Common Stock
that results from dividing the Conversion Price in effect at the time of
conversion for Series E Preferred Stock into $2.60 for each share of Series E
Preferred Stock being converted; the Conversion Price of the Series E Preferred
Stock shall initially be $2.60 per share of Common Stock. The initial Conversion
Price of each series of Preferred Stock shall be subject to adjustment from time
to time in certain instances as hereinafter provided. No adjustments with
respect to conversion shall be made on account of any dividends that may be
accrued but unpaid on the Preferred Stock surrendered for conversion, but no
dividends shall thereafter be paid on the Common Stock unless such unpaid
dividends have first been paid to the holders entitled to payment at the time of
conversion of the Preferred Stock.
Before any holder of Preferred Stock shall be entitled to convert the
same into Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, to the
23.
office of the corporation or any transfer agent for such Preferred Stock and
shall give written notice to the corporation at such office that such holder
elects to convert the same. The corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock,
or to such holder's nominee or nominees, certificates for the number of full
shares of Common Stock to which such nominee shall be entitled, together with
cash in lieu of any fraction of a share as hereinafter provided, and, if less
than all of the shares of Preferred Stock represented by such certificate are
converted, a certificate representing the shares of Preferred Stock not
converted. Such conversion shall be deemed to have been made as of the date of
such surrender of the certificate for the Preferred Stock to be converted, and
the person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock on such date. If the conversion is in connection with an offer
of securities registered pursuant to the Securities Act of 1933, as amended, the
conversion may, at the option of any holder tendering Preferred Stock for
conversion, be conditioned upon the closing of the sale of securities pursuant
to such offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Preferred Stock shall not be deemed
to have converted such Preferred Stock until immediately prior to the closing of
such sale of securities.
(c) ADJUSTMENTS TO CONVERSION PRICE. Subject to Section 5(c)(5), the
Conversion Price in effect from time to time for the Preferred Stock shall be
subject to adjustment in certain cases as follows below. Notwithstanding
anything else herein, Sections 5(c)(i), 5(c)(ii) and 5(c)(iii) below shall not
apply to holders of Series E Preferred Stock.
(i) ISSUANCE OF SECURITIES. In the event the corporation shall
at any time after the Issuance Date issue or sell any Common Stock (or shall be
deemed to have issued Common Stock pursuant to Section 5(c)(i)(c) below) for a
consideration per share less than the Current Conversion Price with respect to a
series of Preferred Stock, then, and thereafter successively upon each such
issuance or sale, the Current Conversion Price of such series of Preferred Stock
shall simultaneously with such issuance or sale be adjusted (downward only) to a
Conversion Price (calculated to the nearest cent) determined by dividing
(1) an amount equal to (x) the total number of shares
of Common Stock Outstanding when the Current Conversion Price for such series of
Preferred Stock became effective multiplied by the Current Conversion Price for
such series of Preferred Stock, plus (y) the aggregate of the amount of all
consideration, if any, received by the corporation for the issuance or sale of
Common Stock since the Current Conversion Price for such series of Preferred
Stock became effective, including the aggregate consideration received by the
corporation for the Common Stock giving rise to such adjustment, by
(2) the total number of shares of Common Stock
Outstanding immediately after such issuance or sale.
Notwithstanding the previous sentence, in the event that the
corporation shall at any time within one year after the Issuance Date issue or
sell any additional shares of Common Stock (or be deemed to have issued Common
Stock) for consideration per share less than the Current Conversion Price of the
Series D Referred Stock, then, and thereafter successively upon each such
issuance or sale within such one year period, the Current Conversion Price of
the Series D
24.
Preferred Stock shall simultaneously with such issuance or sale be reduced, in
order to increase the number of shares of Common Stock into which the Series D
Preferred Stock is convertible, to a Conversion Price equal to the consideration
per share at which such additional shares of Common Stock are issued or deemed
issued; provided, however, that if and to the extent any adjustment made in
accordance with the formula contained in this sentence would reduce the
Conversion Price of the Series D Preferred Stock to less than $1.00 per share of
Common Stock, then, to the extent the Conversion Price of the Series D Preferred
Stock is reduced below $1.00, the Conversion Price of the Series D Preferred
Stock shall be adjusted in accordance with the formula contained in the
immediately preceding sentence except that the addend contained in subsection
5(c)(i)(1) shall be the total number of shares of Common Stock Outstanding when
the Current Conversion Price for the Series D Preferred Stock became effective
multiplied by the lesser of $1.00 or the Current Conversion Price for the Series
D Preferred Stock.
For the purposes of this Section 5(c), the following provisions shall
also be applicable:
(a) CASH CONSIDERATION. In the event of the issuance or sale
of additional Common Stock. Options or Convertible Securities for cash, the
consideration received by the corporation therefor shall be deemed to be the
amount of cash received by the corporation for such shares (or, if such
securities are offered by the corporation for subscription, the subscription
price, or, if such securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price),
without deducting therefrom any compensation or discount paid or allowed to
underwriters or dealers or others performing similar services or for any
expenses incurred in connection therewith.
(b) NON-CASH CONSIDERATION. In the event of the issuance
(otherwise than upon conversion or exchange of Convertible Securities) or sale
of additional Common Stock, Options or Convertible Securities for a
consideration other than cash or a consideration a part of which shall be other
than cash, the fair value of such consideration as determined by the Board of
Directors of the corporation in the good faith exercise of its business
judgment, irrespective of the accounting treatment thereof, shall be deemed to
be the value, for purposes of this Section 5, of the consideration other than
cash received by the corporation for such securities.
(c) OPTIONS AND CONVERTIBLE SECURITIES. In the event the
corporation shall in any manner issue or grant any Options or any Convertible
Securities, the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities at the time such Convertible Securities
first become convertible or exchangeable shall (as of the date of issue or grant
of such Options or, in the case of the issue or sale of Convertible Securities
other than where the same are issuable upon the exercise of Options, as of the
date of such issue or sale) be deemed to be issued and to be outstanding for the
purpose of this Section 5(c)(i) and to have been issued for the sum of the
amount (if any) paid for such Options or Convertible Securities and the amount
(if any) payable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities at the time such Convertible Securities
first become convertible or exchangeable: provided that, subject to the
provisions of Section 5(c)(ii), no further adjustment of the Conversion Price of
a series of Preferred Stock shall be made upon the actual issuance of any such
Common Stock or Convertible Securities or upon the conversion or exchange of any
such Convertible Securities.
25.
(ii) CHANGE IN OPTION PRICE OR CONVERSION RATE. In the event
that the purchase price provided for in any Option referred to in subsection
5(c)(i)(c), or the rate at which any Convertible Securities referred to in
subsection 5(c)(i)(c) are convertible into or exchangeable for shares of Common
Stock shall change at any time (other than under or by reason of provisions
designed to protect against dilution), the Current Conversion Price of each
series of Preferred Stock in effect at the time of such event shall forthwith be
readjusted to the Conversion Price that would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case
may be, at the time initially granted, issued or sold. In the event that the
purchase price provided for in any such Option referred to in subsection
5(c)(i)(c), or the additional consideration (if any) payable upon the conversion
or exchange of any Convertible Securities referred to in subsection 5(c)(i)(c),
or the rate at which any Convertible Securities referred to in subsection
5(c)(i)(c) are convertible into or exchangeable for shares of Common Stock,
shall be reduced at any time under or by reason of provisions with respect
thereto designed to protect against dilution, then in case of the delivery of
shares of Common Stock upon the exercise of any such Option or upon conversion
or exchange of any such Convertible Security, the Current Conversion Price of a
series of Preferred Stock then in effect hereunder shall, upon issuance of such
shares of Common Stock, be adjusted to such amount as would have obtained had
such Option or Convertible Security never been issued and had adjustments been
made only upon the issuance of the shares of Common Stock delivered as aforesaid
and for the consideration actually received for such Option or Convertible
Security and the Common Stock.
(iii) TERMINATION OF OPTION OR CONVERSION RIGHT. In the event
of the termination or expiration of any right to purchase Common Stock under any
Option or of any right to convert or exchange Convertible Securities, the
Current Conversion Price of a series of Preferred Stock shall, upon such
termination, be changed to the Conversion Price of such series of Preferred
Stock that would have been in effect at the time of such expiration or
termination had such Option or Convertible Security, to the extent outstanding
immediately prior to such expiration or termination, never been issued, and the
shares of Common Stock issuable thereunder shall no longer be deemed to be
Common Stock Outstanding.
(iv) STOCK SPLITS. Dividends, Distributions and Combinations.
In the event the corporation should at any time or from time to time after the
Issuance Date fix a record date for the effectuation of a split or subdivision
of the outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive ally other distribution payable in additional
shares of Common Stock or Common Stock Equivalents, then, as of such record date
(or the date of such distribution, split or subdivision if no record date is
fixed), the Conversion Price of each series of Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of each series of Preferred Stock shall be increased in
proportion to such increase in the number of outstanding shares of Common Stock
(including for this purpose, Common Stock Equivalents). If the number of shares
of Common Stock outstanding at any time after the Issuance Date is decreased by
a combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price of each series of
Preferred Stock shall be appropriately increased so that the number of shares of
Common Stock issuable on conversion of each share of Preferred Stock shall be
decreased in proportion to such decrease in the number of outstanding shares of
Common Stock.
26.
(v) OTHER EVENTS ALTERING CONVERSION PRICE. Upon the
occurrence of any event not specifically denominated in this Section 4 as
reducing the Conversion Price of a series of Preferred Stock that, in the
reasonable exercise of the business judgment of the Board of Directors of the
corporation requires, on equitable principles, the reduction of the Conversion
Price of such series of Preferred Stock, such Conversion Price will be equitably
reduced.
(vi) MISCELLANEOUS CONVERSION PRICE MATTERS. The corporation
shall at all times reserve and keep available out of its authorized but unissued
Common Stock the full number of shares of Common Stock deliverable upon
conversion of all the then outstanding Preferred Stock and shall, at its own
expense, take all such actions and obtain all such permits and orders as may be
necessary to enable the corporation lawfully to issue such Common Stock upon the
conversion of such Preferred Stock.
(vii) EXCLUDED EVENTS. Notwithstanding anything in this
Section 5 to the contrary, the Conversion Price of a series of Preferred Stock
shall not be adjusted by virtue of (i) the conversion of shares of Preferred
Stock into shares of Common Stock, (ii) the repurchase of shares from the
corporation's employees, consultants, officers or directors at such person's
cost (or at such other price as may be agreed to by the corporation's Board of
Directors), or (iii) the issuance and sale of, or the grant of Options to
purchase, up to an aggregate of 7,837,500 shares, net of repurchases and the
lapse of options, of Common Stock (including the 5,141,471 shares and grants for
shares outstanding on the date hereof), to employees, advisors, directors,
officers or consultants of the corporation or its subsidiaries (including shares
issued or sold pursuant to the exercise of any stock option or purchase pursuant
to a grant under the corporation's stock option plan or stock purchase plan) at
any time after the initial issuance of Series D Preferred Stock at a price which
is less than the Conversion Price of such series of Preferred Stock at the time
of such issuance or sale (all as determined in accordance with this Section 5)
as may be approved by the Board of Directors, and none of such shares referenced
in clause (iii) shall be included in any manner in the computation from time to
time of such Conversion Price under Subsection 5(c)(i) or in Common Stock
Outstanding for purposes of such computation.
(viii) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of
each adjustment or readjustment of the Conversion Price of a series of Preferred
Stock pursuant to this Section 5, the corporation, at its expense upon request
by any holder of such series of Preferred Stock, shall compute such adjustment
or readjustment in accordance with the terms hereof and prepare and furnish to
each holder of such series of Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon the written
request at any time of any holder of a series of Preferred Stock, furnish or
cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Current Conversion Price of such series of
Preferred Stock at the time in effect, and (C) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of a share of such series of Preferred Stock.
(d) OTHER DIVIDENDS. In the event this corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights not referred to in subsection 5(c)(i)(c), then, in each
such case for the purpose of this Section 5(d), the holders of such series
27.
of Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the corporation into which their shares of such series of Preferred
Stock axe convertible as of the record date fixed for the determination of the
holders of Common Stock of the corporation entitled to receive such
distribution.
(e) RECAPITALIZATIONS. If at any time or from time to time there shall
be a recapitalization of the Common Stock (other than a subdivision, combination
or merger or a sale of assets transaction provided for elsewhere in the Section
5), provision shall be made so that the holders of Preferred Stock shall
thereafter be entitled to receive upon conversion of shares of Preferred Stock
the number of shares of stock or other securities or property of the corporation
or otherwise, to which a holder of Common Stock deliverable upon conversion
would have been entitled on such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 5
with respect to the rights of the holders of Preferred Stock after the
recapitalization to the end that the provisions of this Section 5 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of shares of Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
(f) SUCCESSIVE CHANGES. The above provisions of this Section 5 shall
similarly apply to successive issuances, sales or other distributions,
subdivisions and combinations on or of the Common Stock after the Issuance Date.
(g) NO IMPAIRMENT. The corporation will not, by amendment of this
Certificate of Incorporation or through any reorganization, recapitalization,
transfer or assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action. avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 5 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.
(h) NO FRACTIONAL SHARES. No fractional shares shall be issued upon
conversion of shares of Preferred Stock and the number of shares of Common Stock
to be issued shall be rounded to the next smaller whole share. 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 the holder is at the time
converting into Common Stock and the number of shares of Common Stock issuable
upon such aggregate conversion. The value of any fractional share issuable upon
conversion shall be paid in cash by the corporation.
(i) AUTOMATIC CONVERSION. Immediately upon (a) the effectiveness of the
corporation's registration statement on Form S-1 pursuant to which Common Stock
is sold to the public by the corporation (or selling stockholders, if any) in a
public offering registered under the Securities Act of 1933, as amended, at a
per share public offering price of not less than $3.50 (equitably adjusted for
any stock split, combination or similar event) and an aggregate public offering
price not less than $15,000,000, or (b) the conversion of at least fifty percent
(50%) of the then outstanding shares of Preferred Stock, each share of Preferred
Stock shall automatically
28.
be converted into shares of Common Stock at the Conversion Price for such
Preferred Stock then in effect. On and after said conversion date,
notwithstanding that any certificates for the shares of Preferred Stock shall
not have been surrendered for conversion, the shares of Preferred Stock
evidenced thereby shall be deemed to be no longer outstanding, and all rights
with respect thereto shall forthwith cease and terminate, except only the rights
of the holder (i) to receive the shares of Common Stock to which such holder
shall be entitled upon conversion thereof, (ii) to receive the amount of cash
payable in respect of any fractional share of Common Stock to which such holder
shall be entitled, and (iii) with respect to dividends declared but unpaid on
Preferred Stock prior to such conversion date, In the event that any holder of
Preferred Stock presents such holder's certificate therefor for surrender to the
Company or its transfer agent upon such conversion, a certificate for the number
of shares of Common Stock into which the shares of Preferred Stock surrendered
were convertible on such conversion date promptly will be issued and delivered
to such holder.
(j) MERGER: SALE OF CORPORATION. In the event, after the Issuance Date
of any proposed consolidation of the corporation with, or merger of the
corporation with or into another corporation (other than a consolidation or
merger in which the corporation is the continuing corporation and which does not
result in any reclassification of, or change in, the outstanding shares of
Common Stock), or in the event of any proposed sale or transfer to another
corporation of all or substantially all of the assets of the corporation, or in
the event of a sale or transfer of a majority of the voting power of the
corporation, any holder of Preferred Stock may, by delivery of election pursuant
to Section 2 above, elect to have each share of Preferred Stock held by such
holder treated for all purposes as if it had been converted into Common Stock on
the earlier of (i) the record date, if any, for voting by holders of Common
Stock on such event and (ii) the date of such event.
6. REDEMPTION. The Preferred Stock is not redeemable.
7. COVENANTS. In addition to any other rights provided by law, the
corporation shall not take any of the following actions.
(a) HOLDERS OF PREFERRED STOCK. So long as any shares of Preferred
Stock shall be outstanding, the corporation shall not without first obtaining
the affirmative vote or written consent of the holders of not less than fifty
percent (50%) of the outstanding shares of Preferred Stock voting together as a
class:
(i) amend or repeal any provision of, or add any provision to,
this Certificate of Incorporation or the corporation's By-laws if such action
would alter or change the preferences, rights, privileges or powers of or the
restrictions provided for the benefit of, the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series E
Preferred Stock, or increase or decrease the number of shares of Preferred Stock
authorized hereby, provided that any such amendment or repeal of, or addition
to, this Certificate of Incorporation or the corporation's By-laws which affects
the preferences, rights, privileges or powers of one series of Preferred Stock
shall affect each other series of Preferred Stock in a like manner and on a
proportionate basis;
29.
(ii) authorize or issue shares of any class or series of stock
not authorized herein having any preference or priority as to dividends or
assets superior to or on a parity with any such preference or priority of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock; or authorize or issue
shares of stock of any class or series of any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of stock of this corporation having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, or Series E Preferred
Stock;
(iii) reclassify any class or series of any Common Stock into
shares having any preference or priority as to dividends or assets superior to
or on a parity with any such preference or priority of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series E Preferred Stock;
(iv) apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through subsidiaries (as
defined in Section 425 of the Internal Revenue Code of 1986, as amended (the
"Code") or otherwise, of any shares of any class or series of Common Stock,
except from employees, advisors, officers, directors and consultants of, and
persons performing services for this corporation or its subsidiaries on terms
approved by the Board of Directors upon termination of employment or
association;
(v) do any act or thing which would result in taxation of the
holders of shares of the Preferred Stock under Section 305 of the Code (or any
comparable provision of the Code as hereafter from time to time amended);
(vi) If (i) sell, convey or otherwise dispose of all or
substantially all of its property or business, or (ii) merge into or consolidate
with any other corporation (other than a wholly owned subsidiary corporation) or
effect any other transaction or series of related transactions disposing of more
than 50% of the voting power of the corporation;
(vii) authorize, declare or pay any dividend on the Common
Stock before March 31, 1999; or
(viii) increase or decrease the authorized number of shares of
Preferred Stock.
(b) HOLDERS OF SERIES D PREFERRED STOCK. So long as any shares of
Series D Preferred Stock shall be outstanding, the corporation shall not without
first obtaining the affirmative vote or written consent of the holders of not
less than a majority of the outstanding shares of Series D Preferred Stock
voting together as a class, apply any of its assets to the purchase of any
shares of any class or series of the corporation's stock having any preference
or priority junior to or on a parity with the Series D Preferred Stock, except
from employees, advisors, officers, directors and consultants of, and persons
performing services for, this corporation or its subsidiaries on terms approved
by the Board of Directors upon termination of employment or association.
(c) DIRECTORS.
30.
Without first obtaining the approval of at least a majority of the
Board of Directors, the corporation shall not enter into any contracts with, or
make any investments in, persons not resident within North America.
(ix) Without first obtaining the approval of a majority of the
directors elected by the holders of Preferred Stock, the corporation shall not:
(1) increase the number of shares reserved for
issuance to employees, consultants and directors of the corporation pursuant to
incentive plans or agreements;
(2) incur indebtedness in principal amount in excess
of $1,000,000; or
(3) commit or make any capital expenditures in excess
of $200,000 in the aggregate.
C. COMMON STOCK.
8. DIVIDEND RIGHTS. Subject to the prior rights of holders of all classes of
stock at the time outstanding having prior rights as to dividends, the holders
of the Common Stock shall be entitled to receive, when and as declared by the
Board of Directors, out of any assets of the corporation legally available
therefor, such dividends as may be declared from time to time by the Board of
Directors.
9. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up of the
corporation, the assets, of the corporation shall be distributed as provided in
Section 2 of Division B of this Article IV.
10. REDEMPTION. The Common Stock is not redeemable.
11. VOTING RIGHTS. The holder of each share of Common Stock shall have the right
to one vote. and shall be entitled to notice of any stockholders' meeting in
accordance with the By-laws of this corporation, and shall be entitled to vote
upon such matters and in such manner as may be provided by law.
12. NO PREEMPTIVE RIGHTS. The holders of the Common Stock shall not by virtue of
this Certificate of Incorporation have any preemptive rights.
ARTICLE 5
The corporation is to have perpetual existence.
ARTICLE 6
In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware:
31.
A. The board of directors of the corporation is expressly
authorized to adapt, amend or repeal the By-laws of the corporation; provided,
however, that the By-laws may only be amended in accordance with the provisions
thereof.
B. Elections of directors need not be by written ballot unless
the By-laws of the corporation shall so provide.
C. The books of the corporation may be kept at such place
within or without the State of Delaware as the By-laws of the corporation may
provide or as may be designated from time to time by the board of directors of
the corporation.
ARTICLE 7
Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receivers appointed for the corporation under the provisions
of section 291 of Title 8 of the Delaware Code or on the application of trustees
in dissolution or of any receiver or receivers appointed for the corporation
under the provisions of ruction 279 of Title 8 of the Delaware Code order a
meeting of the creditors or class of creditors, and/or the stockholders or class
of stockholders of the corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority, in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall if sanctioned by the
court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the corporation, as the case may be, and also on the
corporation.
A. NO PERSONAL LIABILITY. 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, except for liability (1) for
any breach of the director's duty of loyalty to the corporation and its
stockholders; (2) for acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (3) under section 174 of
the Delaware General Corporation law, or (4) for any transaction from which the
director derived an improper personal benefit.
B. INDEMNIFICATION. Each person who is or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held
32.
harmless by the corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the corporation to provide broader indemnification rights than said law
permitted the corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in the
second paragraph hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof), was authorized by the
Board of Directors of the corporation. The right to indemnification conferred in
this section shall be a contract right and shall include the right to be paid by
the corporation for any expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this section or otherwise. The corporation may, by action of its Board of
Directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
If a claim under the first paragraph of this section is not paid in
full by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense in any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the corporation to indemnity the
claimant for the amount claimed, but the burden of proving such defense shall be
on the corporation. Neither the failure of the corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
section shall not be exclusive of
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any other right which any person may have or hereafter acquire under any
statute, provision of this Certificate of Incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise.
C. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
D. REPEAL AND MODIFICATION. Any repeal or modification of the
foregoing provisions of this Article VIII shall not adversely affect any right
or protection of an director, officer, employee or agent of the corporation
existing at the time of such repeal or modification.
E. VOTE REQUIRED TO AMEND OR REPEAL. The amendment or repeal
of this Article VII shall require the approval of the holders of shares
representing at least sixty six and two-thirds percent (66-2/3%) of the shares
of the corporation entitled to vote in the election of directors, voting as one
class.
ARTICLE 8
Subject to the express provisions hereof, this corporation reserves the
right to amend or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon a stockholder herein are granted subject to this
reservation.
*****
FOURTH: This Amended and Restated Certificate of Incorporation was duly
adopted by the Board of Directors of the corporation.
FIFTH: This Amended and Restated Certificate of Incorporation was duly
adopted by the written consent of a majority of the stockholders of the
corporation in accordance with Sections 242 and 245 of the General Corporation
Law of the State of Delaware and written notice of such action has been given as
provided in Section 228.
IN WITNESS WHEREOF, AeroGen, Inc. has caused this certificate to be
signed by the undersigned officer, thereunto duly authorized, this 1 day of
March, 2000.
By: /s/ Xxxx Xxxx
-----------------------------
Xxxx Xxxx
Chairman and CEO
34.
EXHIBIT B
SHEDULE OF EXCEPTIONS
AEROGEN, INC.
STOCK PURCHASE AGREEMENT
In connection with that certain Stock Purchase Agreement dated as of
February __, 2000 by and among AEROGEN, INC. (the "Company") and PATHOGENESIS
CORPORATION (the "Agreement"), the Company hereby delivers this Disclosure
Schedule to the Company's representations and warranties given in the Agreement.
The section numbers in this Schedule correspond to the section numbers in the
Agreement; PROVIDED, HOWEVER, that any information disclosed herein under any
section number shall be deemed to be disclosed and incorporated in any other
section of the Agreement where such disclosure would be appropriate. Disclosure
of any information or document herein is not a statement or admission that it is
material or required to be disclosed herein. References to any document do not
purport to be complete and are qualified in their entirety by the document
itself. Capitalized terms used but not defined herein shall have the same
meanings given them in the Agreement.
3.1 Organization, Good Standing and Qualification.
The Company represents that it sent in its Delaware Annual Corporate
Report which is due March 1, 2000. However, as of March 1, 2000,
Delaware does not recognize receipt of the report. As a result, as of
March 1, 2000, the Company is not in good standing.
3.2 Capitalization
c) The Company has offered or intends to offer employment or
consulting opportunities to various individuals. These
compensation packages will include options, which will require
an action by the Board of Directors and Shareholders to
increase the number of shares reserved for issuance under the
1996 Stock Option Plan by an additional 2,600,000.
Shares owned directly or indirectly by officers, directors or 5%
shareholders are as follows (prior to the addition of 2,600,000 shares
to the employee reserve):
Shares owned directly or indirectly by officers, directors or
5% shareholders are as follows:
CMEA (Xxx Xxxxxx - Director ) 10.5% 3,897,437
USVP (Xxxx Xxxxx - Director ) 15.6% 5,808,427
Advent 6.8% 2,546,584
Interwest Partners 9.6% 3,571,429
Ell &Co. 6.1% 2,276,326
Xxxxxxx & Co. (Manufacturers Life ) 7.3% 2,714,286
Xxxx Xxxx (Officer and Director) 4.2% 1,542,858
Xxxx Xxxx (Officer and Director 10.2% 3,780,000
Casper de Clercq (Officer) .7% 270,000
3.7 Litigation
On April 30, 1998, a complaint was filed in the Superior Court
of California, a County of Santa Xxxxx (Xxxxxx vs. AeroGen, Inc. and
Xxxxxx Xxxx, XX 000000). The Company has denied each and every
allegation made in the complaint. The case has
35.
gone to arbitration. Reference is made to the Agreement Regarding
Litigation dated July 21, 1998 between the Company and Xxxxxx Xxxx.
3.8 Employee Agreement
It is part of the hiring process for each employee and officer
of the Company to execute an agreement with the Company regarding
confidentiality and proprietary information.
3.9 Patents and Trademarks
The Company has licensed its aerosol generator technology
world-wide to a consumer company in the fields of air fresheners and
insect repellants.
Reference is made to Exhibit C, Section 14 of the
AeroGen/PathoGenesis Development and Supply agreement, and to Bespak
licenses.
3.11 Agreements; Action
a) The Company has entered into an indemnification agreement with its
directors.
Xxxxxx Xxxx has executed promissory notes in favor of the
Company in the amounts of $60,009 and $200,000. The latter note is
secured by a pledge of 500,000 shares of the Company's common stock.
The Company has agreed to reimburse Mr. Ivri's travel and lodging
expenses up to $25,000 per annum.
Xx. Xxxx and Xxxxxx de Clercq have executed promissory notes
in favor of the Company in connection with purchases of the Company's
common stock. Shares sold to these officers are subject to repurchase
(four year vesting schedule) if the individual ceases to be employed by
the Company.
b) The Company has entered into and anticipates spending significant
additional amounts, in excess of $50,000 individually, on capital
equipment, consultants, design and tooling firms, clinicians,
medical and other facilities , research organizations etc., all of
which it considers to be in the ordinary course of its business.
The Company is considering a small European acquisition.
The Company has entered into and anticipates entering into
additional licensing and/or development arrangements whereby it
receives amounts in excess of $50,000, all of which it considers to be
in the ordinary course of its business.
c) In conjunction with the Company's facility lease, the Company is
obligated to return the lab space to shell condition at the end of
the lease term at an estimated cost of $100,000. The Company has
issued a letter of credit to its lessor for $90,000 in conjunction
with this liability.
36.
The Company has borrowed approximately $1,113,000 (original
principal) against now expired term loan facilities. Specific assets
secure the outstanding borrowings.
3.12 Disclosure
Certain agreements requested by Pathogenesis were not provided
because the Company believes the contents of those agreements are
confidential or proprietary in nature or the Company is under an
obligation not to disclose. Such agreements primarily relate to details
of licensing and business development activity at the Company. In
addition, the Company has not provided agreements that the Company
believes contain nonessential details of the interference settlement.
3.13 Rights of Registration and First Offer
The Company has granted certain registration rights to the
holders of warrants, given in connection with equipment financing.
3.15 Title to Property and Assets
See item 3.11(c)
3.16 Financial Statements
The Company provided unaudited financial statements for the 11
month period ended November 30, 1999.
In addition, the Company provided preliminary unaudited income
statement for the month and twelve months ended December 31, 1999.
3.17 Employee Benefit Plans
Reference is made to the Company's medical, dental, life
insurance, long and short term disability, Section 125 (flexible
spending and premium), and non-contributory 401(k) employee benefit
plans, as well as the Company's stock option plan, PTO policy and
standard employment offer letter. Reference is made to a summary of the
Company's employee benefits and policies as provided in a summary
handout for applicants and in the AeroGen Employee Handbook.
3.19 Insurance
The Company currently holds $5 million of product liability
insurance ($1 million basic and $4 million excess) in addition to its
$6 million ($2 million aggregate and $4 million umbrella) of general
liability coverage which specifically excludes product liability.
Reference is made to the individual policies for specifics of coverage.
3.21 Absence of Changes
b) All employees, including officers, received raises effective
the first pay period in 2000.
f) See 3.11
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